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With $1bn deployed, FBN Finance now offers bridge loans for farmers to expedite farmland financing

February 14, 2023

  • Farmers Business Network (FBN) has added the Bridge Loan offering to its FBN Finance platform to expedite farmland financing small- and medium-sized farms.
  • A bridge loan helps farmers compete against cash offers and larger ag companies and investors when securing land.
  • The launch comes as FBN surpasses $1 billion in total capital lent to farmers.

Why it matters:

Buying farmland is a capital-intensive process that’s often ruthlessly competitive. The latter is especially true as more institutional investors and others invest more in farmland as an asset class.

Closing a traditional land loan often takes between 60 and 90 days. Small- to medium-sized farms don’t necessarily have that long when competing with cash buyers, bigger investors, or at auctions. 

Bridge loans, which function as a kind of pre-approval, expedite the farmland financing process for these farmers. Those that obtain bridge loans can typically close on land purchases in shorter timeframes than with traditional loans.

In the case of the FBN Bridge Loan tool, some buyers could close on a purchase in just three weeks.

“Our offering is unique in that it’s really focused around a very quick time to close,” explains Daniel English, general manager of FBN Finance. “We often get requests from people whose financing fell through at the last minute and they need to close, or they’re going to lose a property. Or they know there will be a competitive auction in their area and they want to act as functionally as a cash buyer, bringing the best offer up front.”

FBN’s Bridge Loan is also geared towards farmers looking to purchase real estate or those with an immediate payment deadline coming up but don’t want to stay with a lender for the long term.

“It’s really a way for us to help farmers compete with bigger, larger farmers who have a lot of cash and investors who have cash as well,” says English. 

The Bridge Loan tool operates on a six-month-long maximum timeline, at which point the loan advisor helps transition the farmer to a traditional loan. FBN offers loan amounts up to $2 million and up to 60% loan-to-value (LTV) ratio.

Enabling technology:

English says FBN is able to offer bridge loans through its proprietary technology that values farmland for farmers. This allows them to be able to close the farmland financing without an appraisal being done.

As English explains, most farmland financing requires an appraisal to validate the value of a given property. Traditionally, this could take up to 60 days. As noted above, this makes it tough to compete with cash buyers or big investors.

“Our data science team has developed a highly-accurate automatic valuation model (AVM) guided by appraisal best practices to value farmland parcels across the United States,” he says.
The AVN combines data with mathematical models to determine land values using both the comparable sales and income method of valuation, similar to a traditional appraisal.
“FBN’s precise and unbiased valuations fundamentally speaks to FBN’s core: leveraging technology to drive the farm business profitability,” says English. “Facilitating farmer investment in new land via affordable financing remains crucial to helping farmers boost profitability.”

He adds that the other advantage of FBN’s new tool is the team of loan advisors, underwriters, and credit analysts behind it.

“It’s not just the technology, but also the experience of the team, the deep knowledge of agriculture that’s allowed us to get here. That’s something as we look forward as to how we differentiate ourselves and compete with, you know, all the great credit offerings that are already out there in the market.”

Major milestones for FBN

FBN began in 2014 as a farmer-to-farmer data-sharing network. Over the years, the platform’s available services have piled up: insurance tools, grain marketing services, input purchasing, to name a few.

FBN Finance began in 2020 in response to the wave of refinancing activity happening. It currently offers financing for not just land but equipment, operating lines, inputs and more. The aforementioned data analysis technology expedites the lending and underwriting decisions for these services, too.

Along with the launch of Bridge Loan, FBN Finance announced it has now surpassed $1 billion in total capital financed to borrowers.

“This milestone illustrates how the growing number of members rely on FBN to gain faster, less expensive, and more reliable access to capital to run and grow their operations,” the company said in a statement.

“High-interest rates make it very difficult for farmers’ budgets,” adds English. “They may have good credit, they may have the ability to pay, but obviously it comes out of their bottom line at the end of the day. FBN helps farmers manage that in order to “set themselves up for success,” whether it’s locking in a fixed rate or maintaining some flexibility to prepay and refinance if rates drop.

Today’s FBN Finance news comes on the heels of several announcements: in recent months the company has launcheda livestock partnership with Boveta Nutrition, a strategic collaboration with Greeneye Technology Precision Spraying System, and held its largest Farmer2Farmer event ever in Omaha, Nebraska.

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