2Bits: Tips for selling Wholesale–Access to Capital
Of America’s 1,980 counties, 625 don’t have a locally-owned community bank. One branch may serve 115 counties. At least 35 counties have no bank.
Wall Street Journal reporters, Ruth Simon and Coulter Jones
Farmers scaling up to meet wholesale market demands often need additional capital, and knowing where you will find additional capital is as important as planning for its use.
Selling at the wholesale level often requires you to invest in your production process. This can include building season extension facilities, purchasing additional equipment for post-harvest processing, upgrading or purchasing delivery vehicles, adding storage facilities, and hiring more labor.
One trusted lending option for farmers is community banks.
Why is a loan from a community bank an important option for you?
Community banks have ties to their local community, and in turn, re-invest in that community. Having a vibrant community bank is as important to a rural community as having a network of local farmers! Community banks support schools, churches, and start-up companies, as well as established retail businesses. They’re a place for your farm labor to cash their paychecks.
A shift in the types of loans given frequently occurs when a bigger bank buys a smaller community bank.
These bigger banks have fewer ties to the local community. Often, they rely heavily on algorithms to gauge creditworthiness instead of personal relationships. These bigger banks may decide your loan is too specialized or too small.
Your Farm Credit System (FCS) and Farm Service Agency (FSA) both have loan options available to assist you with your capital asset needs.
In addition to the loans available through FCS and FSA, there are many different non-profit agencies that provide loans and grants to farmers that should be reviewed and considered. Often, a loan from a community bank is one of the most accessible and flexible options for a local farmer to consider.
Have a specific wholesale market question?
Send us your questions at info@2BuyAg.com. We’re happy to incorporate your question into an upcoming 2Bits newsletter.
Marketing to wholesale buyers is one selling option farmers have.
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