Agricultural Lending a Bright Spot for Banks

Rising prices for corn, soybeans and other agricultural commodities are increasing the financing needs of food-related businesses, including meat producers, grain merchants and makers of breakfast cereals, according to bankers.  Overall Agricultural Lending is a Bright Spot for Banks , thrifts, and credit unions rose 11% in the second quarter from a year earlier, according to SNL Financial. Bankers expect demand for agricultural loans to continue to increase.

Bankers like the loans because Agricultural Lending a Bright Spot for Banks and agricultural borrowers boast high incomes to fund repayment and the collateral is attractive. Interest rates on agricultural loans are about 2% to 3% over the 30-day London interbank offered rate, which is currently at around 0.2%.