Are Banks Loaning?

kevthegaff

Lads went in about getting a loan yesterday, was giving them security(120 acres),life assurance, accounts 11/12. Looking for 130k. Anyway yer one reckons my repayment capacity isnt good enough. What the hell is going on? ive repaid 150k in the last 5 years and they wont give me 130 over 15. My loans remaining only amount to 44k. Lads around me have half a million of debt with half the security

maxxuumman

kevthegaff wrote: »

Lads went in about getting a loan yesterday, was giving them security(120 acres),life assurance, accounts 11/12. Looking for 130k. Anyway yer one reckons my repayment capacity isnt good enough. What the hell is going on? ive repaid 150k in the last 5 years and they wont give me 130 over 15. My loans remaining only amount to 44k. Lads around me have half a million of debt with half the security

What bank, was that.
The banks can be funny, paying off the 150k so fast could actually go again you.

kevthegaff

BOI, are they not lending the most?????

farmerjj

think you need to move bank (I,m guessing your aib??) try boi they seem to be best. but then again you would wanna make sure you are in the position to pay this money back,it is a large sum!

Reggie.

maxxuumman wrote: »

What bank, was that.
The banks can be funny, paying off the 150k so fast could actually go again you.

Strange but this is true

onyerbikepat

maxxuumman wrote: »

What bank, was that.
The banks can be funny, paying off the 150k so fast could actually go again you.

Why is that? Surely paying back quickly would indicate a safe bet.

Viewtodiefor

onyerbikepat wrote: »

Why is that? Surely paying back quickly would indicate a safe bet.

They won't make enough money on ya!

Reggie.

Viewtodiefor wrote: »

They won't make enough money on ya!

Terrible for them ain't it

kevthegaff

I can pay it back no problem, theyre really pi$$ing me off as lads are borrowing money left right and centre around here

Reggie.

kevthegaff wrote: »

I can pay it back no problem, theyre really pi$$ing me off as lads are borrowing money left right and centre around here

Yeah but the interest is higher for them and that means more money for the bank in the long run

onyerbikepat

Viewtodiefor wrote: »

They won't make enough money on ya!

I understand that, but it doesnt make sense to refuse a 'good' customer and have them go elsewhere. There are enough people out there not able to make repayments as it is.

Reggie.

onyerbikepat wrote: »

I understand that, but it doesnt make sense to refuse a 'good' customer and have them go elsewhere. There are enough people out there not able to make repayments as it is.

And you wonder why the country is the way it is

delaval

kevthegaff wrote: »

Lads went in about getting a loan yesterday, was giving them security(120 acres),life assurance, accounts 11/12. Looking for 130k. Anyway yer one reckons my repayment capacity isnt good enough. What the hell is going on? ive repaid 150k in the last 5 years and they wont give me 130 over 15. My loans remaining only amount to 44k. Lads around me have half a million of debt with half the security

Kev, fact, banks do not have a clue about business and they demonstrate this ad nauseam.

I would suggest a different approach. Get the bank's Ag person to call to you for a 'review'. The best way to demonstrate your payment capacity is in your own kitchen.

Have your 13 ac done and do a cash flow for next 3 years. Find your average milk price for the last few inc 09 to show that this is the figure that they need to use to stress test your loan, not the 28-30 they use. You will need to show drawings and tax for next few years also.

I never have been in my managers office, all meetings on farm where you have all info to hand.

Security is only part of the dtory now, as that's what led to their (our) problems. Repayment capacity is what you need to demonstrate.

Changing banks won't change this

F.D

kevthegaff wrote: »

Lads went in about getting a loan yesterday, was giving them security(120 acres),life assurance, accounts 11/12. Looking for 130k. Anyway yer one reckons my repayment capacity isnt good enough. What the hell is going on? ive repaid 150k in the last 5 years and they wont give me 130 over 15. My loans remaining only amount to 44k. Lads around me have half a million of debt with half the security

Your problem is you are overvalueing your 120 acres, on a loan we took out last year they only valued it at 5-6k per acre even though its selling for 8-10 k all around, works for them as they have a bigger hold over you

rs8

there only one problem..... your not borrowing enough! try goin for half a million with no security then they will jump on you! banks are only a shower

st1979

F.D wrote: »

Your problem is you are overvalueing your 120 acres, on a loan we took out last year they only valued it at 5-6k per acre even though its selling for 8-10 k all around, works for them as they have a bigger hold over you

How do you work this out. He is giving them security of 120 acres at a low bank valuation of 5-6k is 600-720k. For a total borrowing of 177k (130k + 44k) that is a loan to value of 30% max and at real valuation of 10k an acre its a loan value of 15%. I think the opposite he is giving away too much security for a such a small loan.

I agree if he went looking for 500k he would be looked at differently ( not saying he would get it but they probably would try to make the figures work a bit better as it would make them more money)

If paying back 150k in a few years has not showed repayment capacity what does.
Don't look at this as it being your fault. It is the banks fault they are probably not in a position to lend despite what they say. So I would suggest looking at moving bank. Its not difficult think of it like going to your feed merchant to buy barley. But they have ran out of barley and have no money to buy some more to sell to you. What you would do is go down the road and buy off the next merchant. You wouldn't listen to the first feed merchant telling you that your cattle shouldn't need barley.
You are buying money the same as buying barley. You have to pay for both and you buy it from who ever gives you the best deal end of.

It can be a help to use a good broker (not all brokers just do house mortgages i had one that done business finance)

delaval

Changing banks, same moron different name tag.

F.D

st1979 wrote: »

How do you work this out. He is giving them security of 120 acres at a low bank valuation of 5-6k is 600-720k. For a total borrowing of 177k (130k + 44k) that is a loan to value of 30% max and at real valuation of 10k an acre its a loan value of 15%. I think the opposite he is giving away too much security for a such a small loan.

I agree if he went looking for 500k he would be looked at differently ( not saying he would get it but they probably would try to make the figures work a bit better as it would make them more money)

Sorry i read it wrong i thought he was only going to use a parcel out of the 120 acres

st1979

delaval wrote: »

Changing banks, same moron different name tag.

Its well known some banks are lending some arent.
And his orginal moron said no. We dont really know why but it could be personality clash or many other reasons. He would only move to another moron if that moron says yes.
My own father was from outside farming and in his day to day business dealt with bank managers in his area all the time.When he got the chance to buy the farm all his friendly managers told him no. That he was getting ahead of himself. Didnt matter that it was a good deal for him and the bank. One manager who he didnt get on with gave him the money.
Should he have given up after his own bank said no??

maxxuumman

Last year I moved a size able commercial loan from PTSB to AIB. Got both BOI and AIB into the place to have a meeting. Got the impression from BoI that they thought I hand in the dogs mouth ( PTSB rates were high). Gave me an offer, which wasn't great. They expected me to sign up there and then. I told them I'd wait, they basically said I was lucky to be getting an offer at all. AIB called a few days later, their first offer blew BoI out of the water. Have found them excellent to deal with since.
It pays to shop around, loyalty means nothing to them.
Kev you seem to have all the paper work done. One extra thing that I did is to get a consultant in to do a 3 yr business plan. The bank loved to see that. And the consultants name at the end carries a bit of weight. Another thing is give them as much security as you can ( or as much as they think you can), for 2 reasons
1. They can negotiate better rates with a higher percentage of security
2. Tell them that they'll have the extra security if any small loans are needed down the road for any expansion

And have a reason for them why you paid off the previous loan so fast. They won't want to give you a loan to have it thrown back to them in 4 or 5 yrs not having made any money from it.
If you do get the money, let it run the 15 yrs. there is no saving to be made by paying it of quickly and you won't have to deal with this crap either.

rs8

delaval wrote: »

Changing banks, same moron different name tag.

been there done that

sheebadog

The banks are broke. However if you have your homework done then get them to call out to you with their agri expert. Another thing, never ever ever give them a charge on your property. If your EBIDTA is strong enough and stress tested to extreme years (eg. 2009) then you should be only discussing their margin over ECB rates.
When you act in a business manner they take a different attitude.

Panch18

It seems like madness to give a bank 120 acres collateral on a 130k loan or 120 acres on 175k total loans

And it seems strange that they would then refuse it

Maybe the OP is not as strong financially as he thinks he is?? OP are you paying much tax?? People paying tax are nearly always making proper money - those who have a small taxable income are usually make f##k all

delaval

sheebadog wrote: »

The banks are broke. However if you have your homework done then get them to call out to you with their agri expert. Another thing, never ever ever give them a charge on your property. If your EBIDTA is strong enough and stress tested to extreme years (eg. 2009) then you should be only discussing their margin over ECB rates.
When you act in a business manner they take a different attitude.

What's the problem with a charge on security?

stop thelights

Would the current super levy situation be going against ya or with ya?? Might be a factor if there's a risk of a fine

kevthegaff

basically we brought down the stocking value of the cows the last 2 years to avoid tax, also buildings/house were used from my own pocket so on paper my profits arent large so my repayment capacity is giving the trouble with the BOI even though i could pay by 3 fold the repayments of the loan im looking for!

LivInt20

kevthegaff wrote: »

basically we brought down the stocking value of the cows the last 2 years to avoid tax, also buildings/house were used from my own pocket so on paper my profits arent large so my repayment capacity is giving the trouble with the BOI even though i could pay by 3 fold the repayments of the loan im looking for!

So you cheated the tax man and now expect the bank to give you money on your inflated figures/real figures but these figures are not on paper!!

sheebadog

delaval wrote: »

What's the problem with a charge on security?

Why do farmers not separate the property from the business. The business uses the property but the business is NOT the property.
The property is yours. For the kind of money that the OP is looking for there is no way he should allow a charge. It should not even be discussed. The business can either service the loan or not.
A good strong business on the high street may not even own the property they are in, it's repayment capacity that matters.
Some on here will say that it's OK to give a charge on your deeds if you are buying another farm- I would disagree. Give them deeds of the farm you are buying not your own farm.
Banks love "belt and braces" loans. The agricultural community are one of the few business's that can provide this. Why should they? No other business gives them that security.
However if the EBIDTA doesn't support this it's a different kinda loan.

delaval

sheebadog wrote: »

Why do farmers not separate the property from the business. The business uses the property but the business is NOT the property.
The property is yours. For the kind of money that the OP is looking for there is no way he should allow a charge. It should not even be discussed. The business can either service the loan or not.
A good strong business on the high street may not even own the property they are in, it's repayment capacity that matters.
Some on here will say that it's OK to give a charge on your deeds if you are buying another farm- I would disagree. Give them deeds of the farm you are buying not your own farm.
Banks love "belt and braces" loans. The agricultural community are one of the few business's that can provide this. Why should they? No other business gives them that security.
However if the EBIDTA doesn't support this it's a different kinda loan.

Glad I asked, I'm on the same page as you. Bought land and have charge on it.

lakill Farm

on loans from 0-250k normally you meet the BDMs (Business development managers) they are normally in the branch and "talk to dublin/Head office)

over 250k you talk to the specialist managers who call out to you as they want to make sure you exist. This have a fair bit of say.

So go look for 250k and drawdown your €177 and repay the 44k loan.

dar31

Be prepared, loan approval, is only the first of many hoops you have to jump through, these days
Make sure you ask for enough anyhow, you don't have to draw it all down

dar31

A little of topic, but any any one got rates on car loans / business vehicle lately
Hp lease or term loan

delaval

dar31 wrote: »

A little of topic, but any any one got rates on car loans / business vehicle lately
Hp lease or term loan

5yrs €18-19 per k per mth

€360 approximate per month 20k 5 yrs

16 for 7 yrs

bob charles

dar31 wrote: »

A little of topic, but any any one got rates on car loans / business vehicle lately
Hp lease or term loan

6% from one of the german car manufactures

dar31

bob charles wrote: »

6% from one of the german car manufactures

Got 6.5 after one phone call to bank for Hp, yearly review next week and look for a few other bits.
Jeep loan is aside from the rest just wondering how far the can be pushed on rate for it

bob charles

dar31 wrote: »

Got 6.5 after one phone call to bank for Hp, yearly review next week and look for a few other bits.
Jeep loan is aside from the rest just wondering how far the can be pushed on rate for it

that was done over the phone and ready to roll in 3 hrs after first call. efficiency from the Germans

dar31

bob charles wrote: »

that was done over the phone and ready to roll in 3 hrs after first call. efficiency from the Germans

Good year then, if only I could afford a German engineered vehicle

bob charles

dar31 wrote: »

Good year then, if only I could afford a German engineered vehicle

the ultimate driving machine:D

twas a mates:)

sawdoubters

http://www.irishexaminer.com/farming/dairy/banks-still-see-dairy-as-safe-bet-for-100-loans-247256.html


http://webcache.googleusercontent.com/search?q=cache:_DAfB69GAfcJ:www.ifac.ie/ifac_article23.htm+&cd=27&hl=en&ct=clnk&gl=us

http://business.aib.ie/products/finance-and-loans/farm-loans

dar31

bob charles wrote: »

6% from one of the german car manufactures

cheers bob
got the 6% off them in the end

Greengrass1

Father rang the lad we always get the machinery loans with. He is working with a new company now.
Very hard to get money now.
He said we would need 6mths bank statements with no black marks against ye for missing payments.
You need to have a certain amount of the money your wanting to lend in a deposit as well.
Never used to be like that all the parents ever did was ring him up and he would come out and sign us up no problem at all.

They weren't carefully enough with money when they had it and now there being too carefull

kevthegaff

id never get a loan for any machinery, maybe thats why everything is thirdhand..