Loan Process Basics
Making a visit to a financial institution can be intimidating to some, but it need not be. If you are looking to obtain a loan, there are a few basics to help the process go more smoothly, says John Michael Scott, a lender with Carolina Farm Credit in the Graham Branch. Here are his tips to get you started and, hopefully, put you at ease.
- Have a plan. When you sit down with any lender, it is important to have an idea of why you want a loan and what you are hoping to accomplish. The end goal for Farm Credit, says John Michael, is to help you achieve your goal, and a plan helps. Carolina Farm Credit has multiple loan products. Among them: traditional land loans, lot loans, equipment loans, home and home construction loans, and operating loans. A plan helps the lender distinguish what you are looking to do and where it may fit in with the product lineup. “It helps us serve you better. It doesn’t have to be perfect, but an idea of your outcome is helpful.” If you are a part-time or full-time farmer, a farm plan is needed. Carolina Farm Credit offers templates to help you get started. A lender in your local Farm Credit branch can provide them.
- Gather important documents. At the time you apply for a loan, you will need to bring some basic financial documents with you. Documents may vary, depending on the financing product you are seeking, but here are the basics and having them available can help the process go more smoothly:
- W-2 statements
- Pay stubs
- Bank account information
- Tax returns
- Note important information. When considering land and lot loans, or any real estate, you need to know the address and parcel ID number so the lender can pull the property up on the county GIS system. It is also important to know the seller’s asking price. Likewise, when purchasing equipment, it is important to have a list of the type equipment, year, make, model, number of hours, if applicable, and price. The more information you can provide, the better response your lender can give you.
- Expect business basics. When it comes to land and lot loans, Farm Credit typically finances up to 75 percent of the appraised value or asking price, whichever is less of the two. Your lender will typically discuss down payment and possible monthly payments with you. The wait times until closing are different, depending on the loan. Real estate transactions generally take 30 to 60 days to complete, depending on the transaction. On occasion they may take longer. For equipment loans, plan on one to three days, depending on the transaction.
- Enjoy the perks of being in the Farm Credit family. When you secure an agricultural loan through Farm Credit, a cooperative lending system, you are eligible, but not guaranteed, for the patronage or cash dividend program. The patronage refund reduces a borrower’s effective cost of borrowing. The patronage payout may vary each year, but that money is returned to you.
- Gain easy access to your lender. Carolina Farm Credit is known as a relationship lender. “We are going to be with you through the whole process,” says John Michael. “You get a loan officer when you get a loan. You always have a point of contact with us. There is not a 1-800 number to call. It’s not unusual to have the direct work number for your loan officer that you can call when needed.”
- Feel free to call or stop by your local Farm Credit office. Carolina Farm Credit has 29 branches in its 54-county territory, which extends from the central part of the state to the west. Each office serves a designated area. One of the hallmarks of Carolina Farm Credit is the lender connection to the community. “We serve the communities where we work,” says John Michael. “We are here for you, we are here for agriculture, and we are here for the community.” He says that even if someone isn’t ready to apply for a loan, it’s typical for people to stop by and talk about ideas or plans, and Carolina Farm Credit encourages that. “We want to see what your goals are.”
By Leah Chester-Davis