Agricultural lending can require unique solutions for a volatile and expanding market. Participation loans, or loans originating from multiple lenders and directed to a single borrower, are key to the agricultural lending market. As a secondary market lender, loan participation is a powerful financial tool that we embrace at Agri-Access.
Does Agri-Access participate in joint financing?
The short answer: yes. Absolutely we do. That means for both Scorecard and Traditional loans.
Our Scorecard program is our rapid-response program, with an ultra-streamlined application process and an answer within 24-48 hours, depending on the loan size. With Scorecard, there are caps on the percentage of the loan Agri-Access can participate, based on the total loan to value (LTV) ratio. Specifically, we can finance:
- Up to 75% LTV for loans between $50,000 and $500,000
- Up to 65% LTV for loans between $500,001 and $3,000,000
- Up to 55% LTV for loan between $3,000,001 and $4,000,000
As for the conventional loan review process, there aren’t strict LTV guidelines. Agri-Access will thoroughly review the full application, ultimately making a decision about whether to participate in the loan. In exchange for greater flexibility on the loan requirements, the decision process typically takes longer than a Scorecard decision, up to several business days.
Scorecard applications are an attractive option due to its:
- Simplified application method
- Quicker underwriting decisions
- Limited required information
But that’s not to say a loan application that doesn’t meet the Scorecard approach cannot be approved through the Traditional Loan application process.
What are the benefits of participation loans?
There are multiple benefits to participation loans, both for the borrower and the lending institutions.
For borrowers, the biggest benefit is in the size of loan they can access. Participation loans can be much larger than a single institution would normally be able to finance. This is particularly beneficial for clients seeking financing from a smaller community bank branch with limited capital.
For the lenders, top benefits include:
- Expanded client base and better customer relationships – Participation loans allow institutions to serve clients they may not have been able to take on solo. It also allows institutions to retain and serve existing clients, even when their needs grow beyond that single institution’s means.
- Risk reduction – Even if the buyer has a higher-than-average risk rating, distributing that risk between multiple institutions lowers each institution’s exposure.
- Remain the lender of record for your clients – Agri-Access assigns a professional team of experts to answer your questions and walk you through the process and resources available, while the originator and borrower relationship remains intact.
- Additional non-interest income opportunities – Originators select the servicing and origination fees.
Agri-Access is ready to help community banks
Helping and empowering our community banking partners to better serve the needs of their clients is a founding core principle for Agri-Access. We are proud to partner with other lending institutions to be an advocate for agriculture. After all, community banks have long been the anchors of main streets across America. We believe the personal relationships, community engagement and local expertise of community banks are vital to the success of the individuals they serve.
If you’re seeking solutions to help finance your clients’ agricultural loans, we’re ready. Simply reach out to a relationship manager any time to get started.