Loan Options for Apple Farmers
Fixed-Rate Products
Fixed-rate loans offer stability with a constant interest rate throughout the loan term. For a 15-year fixed-rate term, you'll face one balloon payment at maturity if the amortization exceeds the term. It's like having a predictable financial plan for your orchard.
Adjustable Rate Mortgage (ARM) Loan Products
ARMs provide a fixed interest rate initially, then adjust periodically. A 10/1 ARM, for instance, stays fixed for 10 years and recalibrates annually after that. It's a good fit if you're comfortable with some variability.
Variable Rate Mortgage (VRM) Loan Products
VRMs offer an initial fixed rate, then adjust and settle into shorter fixed-rate intervals. A 10-year VRM with a 25-year term would adjust at years 10 and 20, with steady rates for the last 5 years.
Prepayment Penalties
Good news! Most of these loans don't include prepayment penalties. If you have a bumper crop of Golden Delicious and want to pay off your loan early, you can do so without extra fees.
Loan Structures
Loan structures can bundle all project-related costs into a single loan. It's like having one financial plan to cover everything from equipment to technology upgrades.
100% Financing
This option allows you to include even unexpected expenses in your loan. It's comparable to leaving a car dealership with not just a car, but gas, insurance, and maintenance all in one package.
Term Lengths and Cadence
Lenders can align payment rhythms with your seasonal income. Need a payment plan that matches your next apple harvest? No problem. It's like a custom-fit financial plan for your orchard.
Operating or Capital Lease and Loan Options
These choices offer tax advantages and balance sheet management. Capital Lease might provide eventual ownership, while Operating Lease keeps it off the balance sheet but highlights your profitability.
Avoiding Unnecessary Costs
Look for lenders that help you save with no down payment requirements and reasonable fees. Who wouldn't appreciate extra funds for the latest apple-storing technology or new tractors?
Equipment Financing Programs
The Mow NOW Pay LATER program offers a minimum financing of $1,500, with no interest for 120 days and no payments for 150 days. After that, you'll face a 5.49% interest rate over 48 monthly payments. For $7,500 financed, payments would be $177.85 a month.
The 0% for 36 Months option provides interest-free financing for three years with fixed monthly payments of $212.50 on $7,500, plus a $125 loan origination fee. It's suited for those with a credit score of 660 or higher.
The 1.99% for 48 Months plan offers financing at $165.93 per month for $7,500, with an APR of 2.98%.
For quick turnaround, the 8.99% for 12 Months plan might fit. On $7,500, you'd pay $660.39 per month, with a $50 loan origination fee.
Extended Payment Options
- 10.99% for 24 Months
- 12.99% for 36 Months
- 14.99% for 48 Months
Under the 14.99% plan, you'd pay $212.80 monthly for financing $7,500 over four years.
The sub-prime program offers a 10.99% interest rate over 36 months for those with less-than-perfect credit scores.
These financing programs, provided by Sheffield Financial, often come without prepayment penalties, allowing early debt clearance if you have a particularly juicy harvest.
Modern Technology and Storage Solutions
Controlled Atmosphere (CA) Storage
CA storage extends apple freshness for almost a year by providing an ideal environment that slows respiration and reduces stress on the apples.1
Eco-Friendly Measures
Consider reducing electricity bills with solar systems, smart controls, and energy management. A solar-powered resiliency system can keep your storage functioning during power outages.
Financing Options
Equipment financing allows you to include all these eco-friendly solutions in one loan. Operating leases can showcase your profitability without impacting your balance sheet, simplifying your accounting.
Sheffield Financial and other specialized agriculture lenders offer rates and terms suited to your specific farming needs. Many loans come without prepayment penalties, allowing early repayment without additional costs.
Flexible Payment Structures
With 100% financing options, you can acquire orchard equipment without depleting your cash reserves. You can include everything — even sales tax, installation fees, and more — in one comprehensive financial package.
Specialized lenders offer financial terms that fit your apple business, with tax benefits for long-term savings.
"Operating leases allow equipment use without heavily impacting your balance sheet, while capital leases lead to ownership. Both offer tax advantages depending on your financial strategy and long-term goals."
Payment plans can be adjusted to match your orchard's cycles. Some lenders offer seasonal payment schedules aligned with harvest times. For even more customization, payment plans can be adjusted to suit your cash flow needs.
- Watkins CB, Nock JF. Controlled-atmosphere storage of 'Honeycrisp' apples. HortScience. 2012;47(7):886-892.