Business credit lines are essential to long-term success. However, not all credit lines are the same. Understanding the difference between the various types of credit lines can help…
The agricultural industry succeeds when it has access to working capital. The upkeep on equipment, storage facilities, employees, distribution chains, and more can place a huge strain on finances. Traditionally, the agricultural industry has turned to loans and other debt-based funding methods to stay in business. However, loans can become a burden, and the lack of working capital can for many agricultural businesses to file for bankruptcy. Fortunately, there is a way to create a renewable source of working capital for long-term success.
Debt and the Agricultural Industry
Debt financing plays a big part in the agricultural industry. Operating costs are high across the country. Farms in the Midwest are in bankruptcy. Limited hours of service have supply lines and distributors scrambling for capacity trucks to complete supply chains. Equipment is expensive. Every aspect of the agricultural industry is used to taking out loans to rightsize issues with working capital, but loans are limited and place debt on the books. When the capital is used and the same issues come back around, the conventional response to compound liabilities with more debt from additional loans. The vicious cycle threatens to put many in the agricultural industry out of business. As a whole, the agricultural industry needs a better alternative to debt-based financing if we are to continue growing and getting food and livestock to places throughout the United States and overseas.
Renewable Financing Solutions
Instead of taking out multiple loans and going into bankruptcy, farms and businesses in the agricultural industry are using a debt-free and renewable source of capital. Asset based financing provides a revolving line of credit structured around the value of equipment, vehicles, property, inventory, and receivables. The line of credit doesn’t place any debt on the balance sheets, so farmers and business owners can preserve credit ratings. Asset based financing also is not designated for any specific purpose, so it can be used for everything from purchases to payroll, or anything else needed to stay successful. As assets grow, the amount of financing increases, which allows agricultural businesses to maintain a reliable source of capital for the long run.
At CNH Finance, we specialize in asset based solutions for the agricultural industry. If your business wants to break free of the debt cycle and get access to funding that encourages growth and success, contact CNH Finance Today.