Central Nebraska | Sat - 12/3/2016 10:00 They can not "call your loan" til the due date. Operating loans up here usually are March/April 1stish to March/April 1stish. Did bankers chance the due dates ? Maybe a banker or 3 can explain the difference between a revolving line of credit and a straight line of credit with operating loan ? ? ? The late 1980's and the early 90's this was a big deal locally as many local business's learned that "Yes Farmer X has a operating loan" DOES NOT mean he can pay his late summer fall bills..............
A revolving line of credit means that the maximum loan amount can be borrowed, repaid, and borrowed multiple times through out the season. A straight line of credit means that the maximum loan amount can be borrowed once, even if there are pay downs during the season. In all the years I loaned money (11) I only dealt with Revolving lines.
As far as "calling" a loan it all depends on what the provisions of the loan agreement were. If the loan is to a director or insider in the bank the loan can be called at any time (demand feature). If the borrower has to provide a "borrowing base" or collateral valuation on a monthly or quarterly basis and they don't maintain a certain collateral margin the loan may be able to be called. If they use loan funds for inappropriate purposes or do not apply proceeds of grain or livestock sales appropriately the bank may be able to call the loan as well. Another possibility would be if the borrower refuses to provided requested information such as proof of insurance, tax returns, subordination agreements, etc. |
Calling bank loans
