Financial stress is mounting in the Farm Belt, pushing more growers to take on high-interest loans outside traditional banks to stay in business
By Jacob Bunge and Kirk Maltais Nov. 10, 2019 5:30 am ET .
“They keep their finger on you,” said Mr. Kron, who has borrowed from ARM over the past three years at interest rates of about 8%. Comparable rates at more-traditional banks are between 2% and 5%. “A lot of balance sheets deteriorated to below what a lender would accept,” said Curt Hudnutt, head of North America rural banking at Rabobank, one of the world’s largest farm banks.
“We can keep the grower farming,” said Billy Moore, president of insurance and field operations at ARM. The 10-year-old firm, backed by private equity, lends to 1,600 farmers in 19 states. Mr. Moore said the firm’s loan volume has grown at a 40% rate over the past three years. Dry weather hurt Mr. Jobe’s rice, bean and corn crop in a recent year. When he tried to make a claim, his insurance company said he hadn’t properly documented his crop losses. Loan payments carrying an interest rate of about 9% piled up. Mr. Jobe said ARM turned down his request for a new loan. A few months later, he filed for bankruptcy.Mr. Moore of ARM declined to comment on the specifics of Mr. Jobe’s case. He said such outcomes are rare.
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