What are the advantages of Livestock Finance?
Livestock Finance is a type of lending that involves taking a specific animal as collateral to secure a loan. A lender will allow you to repay the loan over time with regular interest payments and make money from the animal’s living, even if they don’t sell. Livestock Finance is advantageous for farmers, ranchers, and livestock traders during drought or economic recession because it’s more affordable than other sources like traditional lenders.
Livestock margin calculator
This is a tool that livestock producers use to determine the amount of money they make on an animal. It considers the difference between what they bought and sold it for and fixed expenses incurred during that period. This can help you determine whether or not it’s an excellent time to sell your livestock.
Advantages of livestock finance
Low-interest rates
Livestock finance is an affordable source of capital because interest rates are low. For one, you can use a margin calculator to determine how much you will earn once you sell the livestock. Furthermore, if you were to take out a bank loan, it would have higher interest rates than livestock finance, and all the profit you make is yours, not the banks.
Flexibility
Livestock finance is flexible, meaning you can use it to borrow a specific amount of money necessary to get your livestock off their land, feed them, or whatever it may be. If you don’t want the loan after receiving it, you can repay the principal amount and keep owning the livestock.
Location Independence
Another advantage of livestock finance is that it’s location-independent. A lender will not come to your place to make you repay the loan, so you get to keep it. At the same time, if you take out a bank loan, it will come to your place for them to collect interest payments on the loan.
No waiting period
There is no such thing as a wait for livestock lenders because loans are issued immediately. If you can repay the principal amount and interest, more money is available to you, and you can keep on with life. With a loan from a bank, there might be a waiting period wherein you would have to wait for the interest payments to be processed by the bank before receiving the principal amount.
Less paperwork
There is not much more paperwork to be done when taking out a loan for livestock than when taking out a loan at the bank. This is because all the calculations are already done for you, and you don’t have to go through them manually.
No collateral needed
Livestock finance is a lot more flexible when it comes to collateral. For example, you can use your animals as collateral. This can be advantageous because the first mortgage lenders will not require that you use the property as a form of collateral.
Enjoy minimum risk
You will not do any additional work or risk anything for livestock financing. You will have to go out of your way to get the loan, which can be time-consuming. With a bank, you might have to go through less paperwork, and you might have to show them something about yourself before getting the loan. This could cause you to expose yourself or put yourself further in danger because you’re showing them things about yourself that they probably don’t need to know.
Protection from inflation
When using livestock finance, you are protected from the effects of inflation. This is because whenever you sell the livestock and make a profit, that profit is due to your capital and labour. On the other hand, bank loans protect your money, while they often depreciate over time due to inflation.
No prerequisites
There are no prerequisites for you to get a livestock loan. All you need is a good credit score, documentation of all terms of the agreement, and collateral to prove that you are serious about repaying the debt. Meanwhile, with a bank loan, you will have to provide additional information, such as proof of assets or extra income, which might not be relevant.
Intrinsic value
Livestock has a lot of intrinsic value, and you might be able to get more money for it than other items due to this. In addition, you won’t have any trouble risking these animals because they have a lot of intrinsic value, as I just said. For example, your bank might offer a $200,000 loan, while livestock finance provides $300,000.
