Posted 4/26/2017 11:02 (#5983144 - in reply to #5982836) Subject: RE: Line of credit limits
Amherst WI
chadlit - 4/26/2017 07:01
hinfarm - 4/26/2017 07:56
There would be equity in the growing crop to use as well.
NO!
You cannot use any equity in the crop as it is not guaranteed income. If you are using the crop as a working capital asset in your balance sheet you are not doing yourself a favor. I use to do this as well, but it is not correct.
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I didn't say it went on the balance sheet as working capital, but it does contribute to your net worth on the BS.
When the bank loans you money they are loaning you money to put in a crop. So when the bank gives me $5 to put a crop in and I do so it is now worth $0 during the crop year? That has not been the case ever in any lending I have ever been involved in, but it is best to do a BS when crops are not growing so you have a true inventory.
Line of credit limits
