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1. Knowledge Gap Between Banks and Dealers

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Most local and regional banks are eager to finance the purchase of more land or hard assets that require minimal analysis or monitoring. But dairy equipment is becoming increasingly hi tech, specialized, and capital intensive, scaring away many traditional lenders who mistakenly view this industry as high risk.

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2. Lack of Personalized Service and Tools

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Have you ever bought a car? And used dealer financing? The answer is probably yes. And it was probably a very efficient and smooth process. The auto dealer has all the financial tools and training to effortlessly walk you through the process and close the deal without breaking a sweat. Getting a deal done today in the dairy equipment industry is like pulling teeth. Banks have consolidated and hollowed out their credit teams, with many closing their offices for days unable to process deals or answer questions. This lack of service further constrains a dealers’ ability to sell and finance projects.

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3. Suboptimal Rates, Terms, and Financing Options

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If a farmer or a dealer uses any financing option today it's usually via their primary lender or a captive dealer finance program, which is usually backed by one bank. In these scenarios, that bank is the only offer in town. Whatever their rate, term, or financing option (lease or loan) is for a specific project, that’s what you get. This leads to rates that are often higher than it should be, terms that are less flexible, and rigid financing options. Without competition, the dealer and farmer lose.

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4. Rigid Credit Scoring Criteria

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Every farm is different and all farms should have the opportunity to innovate and enhance their business. Many lenders today are overly rigid in how they score a borrower's credit worthiness, especially for younger farmers. This leads to less approvals. Which means a slower pace of innovation for the farm and forces some dealers to finance certain deals off their own balance sheet, further stagnating growth.

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5. Slow Processing Times and Paperwork, Paperwork, Paperwork!

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Time kills deals. When a dealer and farmer come to an agreement on a project, time is of the essence. Today’s lenders can take weeks to months to process equipment deals, leaving farmers and dealers in the lurch. This leads to more deals dying on the vine waiting for financing and slower growth and innovation for both the farm and dealer. And did I mention Paperwork!? For most dairy equipment projects, lenders want to see your tax returns, balance sheet, income statement, and even high school transcripts. Far from a simple or streamlined application process.

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