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Structuring Farm and Agribusiness Loans: Key Terms, Mitigating Risks, and Role of the Farm Credit System and USDA

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Conducted on Wednesday, August 23, 2023

Recorded event now available

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This CLE webinar will discuss the unique issues farm loans present given the underlying collateral and applicable laws. The panel will address best practices that lenders should follow when granting agricultural-based loans, techniques to combat the biggest challenges, advice on mitigating risks, and understanding the role of the Farm Credit System (FCS) and USDA Farm Service Agency.


Farm and agribusiness loans present unique challenges and opportunities. Like other industries, access to capital is critical for the farmer/producer. However, unlike other businesses that can rely on regular cashflow streams, income, and operating expenses do not always align on a farm or ranch. Thus, production and operating loans are key sources of capital for farmers to help supplement variable cash flow of the annual production cycle.

Production loans are short term and finance the production of a particular commodity. The loan is self-liquidating because it is repaid from the proceeds of the sale of the particular crop or livestock it was made to finance. Capital loans or operating loans are granted to farmers for non-production purposes, such as financing supplies, goods, machinery, and other equipment necessary for the farming operation.

Financing sources for both production and operating loans include commercial banks, insurance companies, equipment manufacturers, seed companies, cooperatives, processors, the USDA Farm Service Agency, and the FCS, which is the largest agricultural lender made up of a nationwide network of privately-owned banks and associations.

The structure of the farm or agribusiness loan should be supported by sufficient cash flow and from the expected source of repayment, and any borrower challenges and problems should be anticipated and included in the loan structure. To mitigate risk, loan covenants and other credit enhancements should also be included in the structure of the loan.

Listen as our authoritative panel of agribusiness practitioners guides you through best practices for documenting and renewing agricultural loans and how to mitigate risks. The panel will identify threshold considerations when making these loans and discuss issues unique to the underlying collateral, including livestock, crops, government payments, equipment, and land.



  1. Sources of agricultural capital
    1. Commercial banks
    2. Insurance companies
    3. Equipment manufacturers
    4. Cooperatives
    5. Processors
    6. Farm Credit System
    7. Farm Credit Agency
  2. Types of loans
    1. Production loans
    2. Capital or operating loans
  3. Valuation of collateral
  4. Risks associated with agricultural lending
    1. Production risk
    2. Market volatility
    3. Government policies and legal risks
    4. Limited purpose collateral
  5. Tools and drafting techniques to mitigate risks
  6. Structuring the loan
    1. Short-term loans
    2. Medium-term loans
    3. Long-term loans
    4. Carryover debt


The panel will review these and other key issues:

  • What are some of the unique aspects of an agribusiness loan?
  • What are the agribusiness lending opportunities?
  • What role do the FCS, the Farm Service Agency, and other nonbank lenders play in the agribusiness credit market?
  • What are the loan covenants and other credit enhancements that can be used to mitigate risk?
  • What is the framework for assessing a borrower's loan repayment sources?
  • What are the key considerations when structuring an agribusiness loan?
  • What are the key issues and risks associated with agribusiness loans?
  • How to assess the value of the unique collateral


Bialick, Matthew
Matthew Bialick

Managing Partner
MJB Law Firm

Mr. Bialick is a banking and commercial law attorney who provides litigation, transactional and advisory support to...  |  Read More

Peterson, Jeffrey A.
Jeffrey A. Peterson

Winthrop & Weinstine

Mr. Peterson represents banks and financial institutions in connection with a wide range of matters, spanning...  |  Read More

Sargent, Brandy
Brandy A. Sargent

K&L Gates

Ms. Sargent represents debtors, lenders, vendors, purchasers, and official and unofficial committees in a variety of...  |  Read More

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