Loans and Loan Types Loans are used for

Loans and Loan Types

Loans are used for many reasons • Feed, seed and fertilizer purchases • Machinery, livestock, and equipment purchases • Land , building, and home purchases • Business start up expenses like attorney fees, incorporation fees, and product development costs • Emergencies

Short term loans • Less than 1 year • Used to buy items like feed, seed, fertilizer, and other consumables • Referred to as an operating note • Can be financed by merchants, banks and private individuals • Interest generally calculated using simple interest method. • Used to even out highs and low in income and expenses

Intermediate term notes • 1 to 10 years in duration • Used to buy depreciable assets like machinery, equipment , breeding livestock, and vehicles • Banks, Individuals, Ford credit, GMAC • Interest calculated several ways including remaining balance and add on

Long term loan • Used to purchase land, buildings, homes • Longer than 10 years in duration • Usually a mortgage with equal payments • Provided by commercial banks, Farm credit system, individuals, insurance companies, and mortgage companies

Mortgages • Mortgages are long term loans that are generally used to finance the purchase of homes. • Mortgages are generally offered in 15 and 30 year lengths with many options to choose from.