For generations, agricultural credit has been the go-to source for agriculture producers seeking capital to expand their operations. While these institutions play a crucial role in supporting the agricultural sector, they aren't the only game in town. A growing number of alternative financing options are emerging, offering farmers and other ag-related businesses greater flexibility and potentially more favorable terms.
Why Explore Alternatives to Ag Credit?
Stiff Competition: Ag Credit can be highly competitive, with stringent loan requirements and lengthy application processes.
Limited Flexibility: Traditional loans often come with rigid repayment schedules and restrictions on how funds can be used, hindering innovation and adaptability.
Focus on Collateral: Ag Credit heavily relies on collateral, such as land and equipment, which can be a barrier for younger farmers or those with less established operations.
What’s Private Credit?
Private credit refers to loans and other forms of debt financing that are not publicly traded on stock exchanges. This includes loans made directly by private lenders, such as investment funds, hedge funds, and family offices, to companies.
Key Characteristics of Private Credit Include:
Diverse range of borrowers: Private credit can be extended to a wide range of borrowers, including small and medium-sized enterprises, middle-market companies, and even larger corporations.
Non-publicly traded: Unlike publicly traded bonds, private credit instruments are not listed on any exchange.
Direct lending: Lenders typically engage in direct negotiations with borrowers, offering customized loan terms.
Considerations When Choosing an Alternative Financing Option:
Interest Rates and Fees: Carefully compare interest rates, fees, and repayment terms across different lenders and financing options.
Eligibility Criteria: Understand the specific eligibility requirements and application processes for each option.
Risk Tolerance: Assess your risk tolerance and choose financing options that align with your comfort level.
Long-Term Goals: Consider how different financing options will impact your long-term financial goals and the sustainability of your business.
Harvest Returns has offered private credit investments to producers and other agriculture-related businesses since 2017, and they remain some of our most popular and successful vehicles. Agribusinesses come to us because of the flexible offering terms and streamlined capital raise process that we provide compared to traditional ag lenders. We can help with land purchases, expanding your cattle herd, or even acquiring a new business.
Our first Private Credit Fund was launched in 2024, and Fund II will be launched early in 2025. To find out if your operation might be a fit for our fund, please submit your details below.