Posted 9/20/2016 13:49 (#5539550 - in reply to #5539522) Subject: RE: I have read all of your post Just
John Burns - 9/20/2016 13:12
That is one nice thing about vendor financing. If you buy a tractor, they have a lien on a tractor, nothing else. If you buy seed from a seed dealer and finance it, they do not ask you for a lien on your machinery.
Banks love to tie everything up wrapped tight in a blanket. To a banker, there is no such thing as too much collateral.
John
The reason a bank needs to take as much collateral as possible is mainly because if the farmer takes an existing combine and trades with dealer financing, the bank has now lost its collateral position on that equipment. If a seed dealer sells you seed and files the appropriate UCC filings, the Seed dealer also gets their name on the grain check and their seed filing goes ahead of the bank. If the combine gets sold, the dealer who financed it gets paid first. If nothing is left the bank now gets nothing. When the grain in sold and it takes the whole crop to pay the seed/fertilizer/chemical suppliers, the bank get nothing, so additional collateral is needed in cases like this. In todays Ag environment, it gets worse so the Bank must make sure they have the proper information in case of liquidation/bankruptcy. When things were very good, the bank didn't have to worry so much, just like the farmer.
Banking Question
