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Scott City KS | I wasn't really sure where to put this, but I'm looking to see what the industry is doing regarding financing.
I have a farming operation. Last year I ran the business through an S Corp. I got an operating note. The banker said I had to sign a personal guarantee. I did. Then upon reflection, it was dumb. A big reason I set up the entity was to indemnify my personal assets from business risk exposure. I have a really good equity position and figure I need to set the business practices properly before I get much for leverage. So I told the bank that I want to set up my operating loan without a personal guarantee. He balked and whined and carried on. I told him I'd be in soon to discuss a loan on a piece of machinery. Before I do, I would like to get my ducks in a row and make a case for operating without a guarantee.
I talked to some friends that work or have worked in the banking industry and they all said that all ag loans have to have them. I don't know if this is a local thing, regional thing, federal thing, what. Obviously there is a threshold somewhere because I'm pretty sure big corporations don't require personal guarantees.
My question for the group is if your guys' farm loans are required to be personally guaranteed? Any insight would be appreciated.
Thanks in advance.
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Personally Guaranteeing Farm Loans
