Transition Financing Summary
Loan Amount: $6,000,000
I/O for 3 year
Monthly payments
In 2016, this 3rd generation dairy farmer saw an opportunity to expand their dairy facilities. Once expansion was completed in 2018, the dairy was then permitted to milk 1,600 head of cows with full capacity at 2,100 head on the farm. This loan will be used to refinance real estate and rebalance the operation’s financial position.
Loan proceeds will also fund the purchase of 700 head of dairy cows to bring the dairy facility to capacity. Increasing the number of milk cows so that the dairy has higher milk production will allow the operation to take advantage of existing space and, therefore, efficiency.
Combining the real estate loans and consolidating some of the chattel debt will better position the operation to apply payments and reduce debt left in place more quickly. The interest-only structure will increase interest expense on the increased debt, but will be offset by not requiring principal payments on the new debt until increased production takes place. The proposed increase in herd size will increase cash flow and better use the assets already in place.
