Stocking Loan

millhousegirl

Does anyone here have experience of getting a stocking loan from a bank recently? A couple of questions I have which would be useful to get some direction on before I approach a bank are:

• Which bank is favourable towards the beef sector?
• Rates offered?
• Length of time they give the loan for? And is repayment a bullet payment at the end of the loan?

I am probably looking for a loan in the region of €10 to €15k. I have 45 acres to stock with animals and want to keep it independent from may Dad's farm.

blue5000

Either aib or b of i, I avoid ulster

Haven't drawn down one recently so not sure what rates are like, ballpark would be 5% but depends on security.

Most are 11 months, clear it for the 12th month and you should be ok to go again.

Paperwork is horrendous though, they want to know everything.

Sam Kade

blue5000 wrote: »

Either aib or b of i, I avoid ulster

Haven't drawn down one recently so not sure what rates are like, ballpark would be 5% but depends on security.

Most are 11 months, clear it for the 12th month and you should be ok to go again.

Paperwork is horrendous though, they want to know everything.

That's more of a credit line facility, I have that account with aib I took out 5k for stock purchase 2 years back and had it paid before the 11 months €30 interest

lakill Farm

millhousegirl wrote: »

Does anyone here have experience of getting a stocking loan from a bank recently? A couple of questions I have which would be useful to get some direction on before I approach a bank are:

• Which bank is favourable towards the beef sector?
• Rates offered?
• Length of time they give the loan for? And is repayment a bullet payment at the end of the loan?

I am probably looking for a loan in the region of €10 to €15k. I have 45 acres to stock with animals and want to keep it independent from may Dad's farm.

BOI, AIB and UB are all the same
Rate approx. 5.5-6.5%
A stocking loan is normally either 11 months or 50 weeks

J DEERE

What's the criteria starting off? Just say it's your first time going in, no assets, collateral as such to offer? Do they look for off farm income or deposit of some sort?

lakill Farm

J DEERE wrote: »

What's the criteria starting off? Just say it's your first time going in, no assets, collateral as such to offer? Do they look for off farm income or deposit of some sort?

set of projections if/ along with accounts
tax up to date
off farm income
experience

Muckit

Knowing little or nothing about a stocking loan, I went into the credit union recently to see about an €8k loan to buy stock. It was their typical loan, same as if buy car etc. The interest was around the €60/mth on that amount . I would be clearing it in October, but seems would be dear money.

I'm too late this year anyways. Should have been looking for it in March.

They were looking for same stuff most banks would be. .. 3mths bank statements 3 recent payslips, c card statement. Mortgage statement etc etc

Sam your package seems to be too good to be true in comparison. It wasn't you that brought down the banks?!

whelan2

Muckit wrote: »

Knowing little or nothing about a stocking loan, I went into the credit union recently to see about an €8k loan to buy stock. It was their typical loan, same as if buy car etc. The interest was around the €60/mth on that amount . I would be clearing it in October, but seems would be dear money.

I'm too late this year anyways. Should have been looking for it in March.

They were looking for same stuff most banks would be. .. 3mths bank statements 3 recent payslips, c card statement. Mortgage statement etc etc

Sam your package seems to be too good to be true in comparison. It wasn't you that brought down the banks?!

our credit union wont give out farm/business loans,will give out other loans up to 20k at 10% interest. you must have 20% of the amount your are looking for in shares in your account. One of the directors took out a loan for over 100k in the boom and never paid any of it back, we are effectively paying his debt through a 10% interest rate

millhousegirl

Being talking to two banks.

• Ulster 9%
• BOI 6.75%

Quite a difference on both rates.

lakill Farm

millhousegirl wrote: »

Being talking to two banks.

• Ulster 9%
• BOI 6.75%

Quite a difference on both rates.

the 9% rate is unsecured rate, the secured rate is 6.01% or 5% margin over cost of borrowing of 1.01%

check out AIB they have a great product of a agri finance for stocking loan/working capital facility . it runs in tandem to your current account

Timmaay

whelan2 wrote: »

our credit union wont give out farm/business loans,will give out other loans up to 20k at 10% interest. you must have 20% of the amount your are looking for in shares in your account. One of the directors took out a loan for over 100k in the boom and never paid any of it back, we are effectively paying his debt through a 10% interest rate

Crazy crazy cost of interest. I did have a bit of money in my local credit union, but alongside almost zero interest on savings it's not as if they are any safer than other deposit locations. With almost no chance of me ever bothering taking out a loan with them I closed it.

But it's bizarre, it would be easier to get a bloody student loan to blow it all J1ing or a loan for a holiday than it is to get a stocking loan, which with any sort of sound business plan will definitely pay for itself.

whelan2

Timmaay wrote: »

Crazy crazy cost of interest. I did have a bit of money in my local credit union, but alongside almost zero interest on savings it's not as if they are any safer than other deposit locations. With almost no chance of me ever bothering taking out a loan with them I closed it.

But it's bizarre, it would be easier to get a bloody student loan to blow it all J1ing or a loan for a holiday than it is to get a stocking loan, which with any sort of sound business plan will definitely pay for itself.

they will also give out a lower interest loan - i think 6%- they will only give you the amount you have in shares, so if i want a 10k loan i would have to have 10k in my shares:eek: so i pay 6% interest on the 10k loan and they pay feck all on my 10k shares

CloughCasey1

millhousegirl wrote: »

Does anyone here have experience of getting a stocking loan from a bank recently? A couple of questions I have which would be useful to get some direction on before I approach a bank are:

• Which bank is favourable towards the beef sector?
• Rates offered?
• Length of time they give the loan for? And is repayment a bullet payment at the end of the loan?

I am probably looking for a loan in the region of €10 to €15k. I have 45 acres to stock with animals and want to keep it independent from may Dad's farm.

What had you in mind to put in the 45 acres if you don't mind me asking? Its tough enough to get started without banks on your case. Could ya not ease yourself into stock?

Bullocks

CloughCasey1 wrote: »

What had you in mind to put in the 45 acres if you don't mind me asking? Its tough enough to get started without banks on your case. Could ya not ease yourself into stock?

A mate of mine inherited 45 acres lately but hadnt the money to stock it properly for a few years . He has 30 acres given to a lad for for barley on the condition that he gets it back in 3 years in grass at the right PH and there is a bit of fencing to be done that they are haggling over aswell . He is buying reared calves for the rest , both of them are happy enough with the deal

CloughCasey1

Bullocks wrote: »

A mate of mine inherited 45 acres lately but hadnt the money to stock it properly for a few years . He has 30 acres given to a lad for for barley on the condition that he gets it back in 3 years in grass at the right PH and there is a bit of fencing to be done that they are haggling over aswell . He is buying reared calves for the rest , both of them are happy enough with the deal

He could do the same deal on the 15 acres after. You'll rear a lot of calves on 15 acres. If he bought 10 fr calves 1k and killed them at 16 mts he'd have 10k in his pocket and prob 3k profit. That would be two incalf heifers if he looking at suckler route. Its a marathon not a sprint!!

blue5000

Has credit dropped lately with milk prices dropping or perhaps Greece, anyone tried recently?

millhousegirl

lakill Farm wrote: »

the 9% rate is unsecured rate, the secured rate is 6.01% or 5% margin over cost of borrowing of 1.01%

check out AIB they have a great product of a agri finance for stocking loan/working capital facility . it runs in tandem to your current account

I gave AIB a call. 4.2% rate for young farmers. They seem quite keen and have a few good products setup for young farmers. Ulster are way off the mark.

millhousegirl

blue5000 wrote: »

Has credit dropped lately with milk prices dropping or perhaps Greece, anyone tried recently?

The borrowing rate for banks has been very low for the past 5 years. They just don't pass it on the customer. AIB appear to be proactive in the sector though.

Sacrolyte

Just checked my rate on the phone for stocking loan. The product I think is called farm credit line and the rate at the mo on my ac is 2.35%.

millhousegirl

Sacrolyte wrote: »

Just checked my rate on the phone for stocking loan. The product I think is called farm credit line and the rate at the mo on my ac is 2.35%.

Add on LIBOR and it should be about the 4.2% rate.

Sacrolyte

millhousegirl wrote: »

Add on LIBOR and it should be about the 4.2% rate.

So why does my account not have the London Interbank Offered Rate added then if that's the case?

lakill Farm

Sacrolyte wrote: »

So why does my account not have the London Interbank Offered Rate added then if that's the case?

sometimes they only quote the banks margin.

ie 2.5% over

most banks cost of finance at the moment is approx. 1%

Sacrolyte

lakill Farm wrote: »

sometimes they only quote the banks margin.

ie 2.5% over

most banks cost of finance at the moment is approx. 1%

But it's on the statement. Surely that's the rate and not the banks margin. That would just be odd.

lakill Farm

Sacrolyte wrote: »

But it's on the statement. Surely that's the rate and not the banks margin. That would just be odd.

check your loan agreement

WheatenBriar

lakill Farm wrote: »

the 9% rate is unsecured rate, the secured rate is 6.01% or 5% margin over cost of borrowing of 1.01%

check out AIB they have a great product of a agri finance for stocking loan/working capital facility . it runs in tandem to your current account

Is that not 500% margin?
10k costs them 101 euro's
You pay them back 601 euro's
Outlay a few emails and button presses?

Bullocks

WheatenBriar wrote: »

Is that not 500% margin?
10k costs them 101 euro's
You pay them back 601 euro's
Outlay a few emails and button presses?

The more you think about what the bank makes , the less you would be inclined to borrow off the hoors . And the disgusting rate they would offer you on a good lump in savings would really turn your stomach against them altogether .

lakill Farm

WheatenBriar wrote: »

Is that not 500% margin?
10k costs them 101 euro's
You pay them back 601 euro's
Outlay a few emails and button presses?

you pay them back €106 for each €100 per year.

sorry misread that. your not taking in number of years its borrowed for

sure if you bought €10,000 worth of cattle you surely want them to be worth a few euro when you go to sell them

also your not taking in inflation rates either

just do it

WheatenBriar wrote: »

Is that not 500% margin?
10k costs them 101 euro's
You pay them back 601 euro's
Outlay a few emails and button presses?

Don't forget bad debts they've to absorb

blue5000

just do it wrote: »

Don't forget bad debts they've to absorb

They've to absorb? I reckon the rest of us are paying for them.

WheatenBriar

lakill Farm wrote: »

you pay them back €106 for each €100 per year.

sorry misread that. your not taking in number of years its borrowed for

sure if you bought €10,000 worth of cattle you surely want them to be worth a few euro when you go to sell them

also your not taking in inflation rates either

I know but,on a 10 month loan today,there'd be little or no inflation
The money isn't theirs either, it's a sourced fund of €100 costing them €1.10 for which they charge you another fiver per 100 on top

Banks modus operandi do my head in because they were recapitalised by us to replace money they lose from bad loans,yet in a lot of cases they got to keep the proceeds of the property sales behind those win win

I do appreciate that loans are a necessary product but gouging is going on due to lack of competition providing them

Sacrolyte

lakill Farm wrote: »

check your loan agreement

Will this do.

Timmaay

Bullocks wrote: »

The more you think about what the bank makes , the less you would be inclined to borrow off the hoors . And the disgusting rate they would offer you on a good lump in savings would really turn your stomach against them altogether .

What ya do here is cut out the middle men, and borrow directly from someone with the cash ha. Obviously there needs to be a lot of trust there, but it's worked out well for me so far.

just do it

blue5000 wrote: »

They've to absorb? I reckon the rest of us are paying for them.

Exactly!

frazzledhome

Timmaay wrote: »

What ya do here is cut out the middle men, and borrow directly from someone with the cash ha. Obviously there needs to be a lot of trust there, but it's worked out well for me so far.

I wouldn't loan money without security or margin

Bullocks

Timmaay wrote: »

What ya do here is cut out the middle men, and borrow directly from someone with the cash ha. Obviously there needs to be a lot of trust there, but it's worked out well for me so far.

Are you borrowing from or lending to someone ? I wouldn't fancy either way and would have a job to get someone to trust me to hand over a few quid

lakill Farm

Sacrolyte wrote: »

Will this do.

you should have a 4- 6 page approx. credit agreement . check it

Dickie10

was going to look into a stocking loan to buy store heifers to replace the heifers that have gone to the factory over the last 2 months but after reading a few posts i think il leave it. have 30 k in current account but wasnt keen on knocking the hell out of it, but i may just bite the bullet . i have another 15 or so heifers to go factory between now and march so should get the money back fairly quick. im thinking of a price range of around 1000 apiece for stores coming in, surely id get a decent enough store heifer for that?

Cassidy2

Dickie10 wrote: »

was going to look into a stocking loan to buy store heifers to replace the heifers that have gone to the factory over the last 2 months but after reading a few posts i think il leave it. have 30 k in current account but wasnt keen on knocking the hell out of it, but i may just bite the bullet . i have another 15 or so heifers to go factory between now and march so should get the money back fairly quick. im thinking of a price range of around 1000 apiece for stores coming in, surely id get a decent enough store heifer for that?

You don't need a stocking loan.I am not a fan of them.what does other people think

galwayhillbilly

Just wondering about these stocking loans do you have to pay them off by the month? or do you pay off at the end when the stock is sold?

CloughCasey1

Cassidy2 wrote: »

You don't need a stocking loan.I am not a fan of them.what does other people think

Id rather buy cheaper stock than get a loan as well. Start small and work up.

jimmy G M

Cassidy2 wrote: »

You don't need a stocking loan.I am not a fan of them.what does other people think

I have used stocking loans in the past, they simply allow you access to capital to buy stock. As long as you can make enough on the stock to cover interest payment and other costs they're grand.

I wouldn't be using them to go mad buying loads of stock at inflated prices and renting land in the hopes of making loads of cash tho.

Generally fine if building your enterprise up - have the land, facilities & time, just short of capital.

galwayhillbilly wrote: »

Just wondering about these stocking loans do you have to pay them off by the month? or do you pay off at the end when the stock is sold?

Usually you pay them off in one or two bulk payments within 12 months when livestock are sold.

Dickie10

they sound good for me, i have cattle being fattened at the minute which should come into 9,500 minimum/bad price. im thinking of getting 12k stocking loan, just to keep cash flow over winter. when these cattle are finished in end of january then i have another 7 to go in april so should have laon paid off in august at ease, is it a good way to keep cash flow going when buying in cattle?

galwayhillbilly

I must have a very bad bank, I have approached them several times about such a loan and I always get the routine of how much per month you can afford to pay.

Dickie10

Was in BOI today and the banker put up my account on screen and agreed straight away to a 12k stocking loan, just asked what type of animal i would be buying and that was it. she approved it within 15mins. told me i had 12 months to pay it back with intrest incuded it is €12,865 if not paid til next october and if paid off within 6 months its 12,460. I should have it paid by june, as i have 8 heifers to go factory in january and 6 around april plus 7 bull weanlings around 300kg to sell in january, im thinking of paying off a bit with each sale.

im buying in around 20 store hifers at 1000 each so im using 12k of banks and 8k of my own. its more so for cash flow than anything else, hopefully work out ok. couldnt belive how easy it was to get the loan i thoought they would want all sorts of paperwork