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Line of credit limits
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seed farmer
Posted 4/26/2017 00:53 (#5982560)
Subject: Line of credit limits


Hi, could someone tell me what a Banker is willing to lend out on a line of credit? I would assume there are a couple ratios, that are used, what's your earning potential, age, risk, and how long you've done business together ect would be important. To keep it simple this particular farmer owns 200k of real estate but owes the bank 100k on the real estate. So he has paid half of it off. To put his crop in for a whole yr it will cost him 100k and he hopes to make 10-15% on his money. What does this farmer need to have as far as a working capital minimum? I think working capital would be cash, grain in the bin accounts receivable in this situation. Leave equipment values out for simplicity. I guess what I'm asking is what's the minimum amount of working capital this farmer would need? Farmer has no other debt besides land. Would farmer need 50% working capital? When does Banker start to get uncomfortable and say no more?
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