Agribusiness BankingFeeder Finance Line of Credit

A feeder finance line of credit provides an avenue for commercial feedlots to attract customers and act as a financing intermediary. You, the feedlot manager, execute a note, security agreement and financing statement with your customer. The note generally requires that your customer provide up-front equity of either $150/head or 30% of purchase price of the cattle, with 100% of the feed expense loaned to you.

In turn, the bank takes assignment of the documents between you and your customer, and provides you with the funds necessary to complete the transaction (approximately 70% of the purchase price of the cattle and 100% of the feed costs). You are responsible for assessing the repayment capacity of your customer; therefore the bank requires that you provide a guaranty of repayment on the notes. Interest rates are variable, and are determined by your financial condition.