Transition Financing Summary
Loan Amount: $700,000
I/O for 3 years
Semi-annual payments
Farmer B currently has a combined 860 acres in crop production, with 360 of them organically certified ground under irrigation pivot. They also operate an organic grain processing facility with capacity for approximately 700,000 bushels of grain on-site. The grain facilities move grain for local producers as well as other agribusinesses.
Loan proceeds will be used to purchase 675 acres of cut over timber land that is eligible for organic farm production. The land will be cleared and developed into tillable acreage, incorporated into the existing organic farm production, and then run through the grain facility; increasing production as well as reducing risk associated with outside contracts.
It is estimated that it will take 12-18 months to clear the land. Interest-only terms of the loan will allow the amount of time needed to improve the collateral so that it can generate enough income to service its debt on a stand-alone basis, and also preserve cash throughout the process.
