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What is a Capital Line of Credit?

This product provides high quality customers with a revolving line of credit for capital purchases. These purchases may include equipment, breeding livestock, real estate improvements, college expenses, or other capital items. It is similar to a credit line with the added benefit of being able to amortize the purchases for longer than one operating cycle.

Who is eligible for a Capital Line of Credit?

Capital lines of credit are available to higher-quality customers with good financial management skills. Prime prospects include real estate loan customers with small operating and/or equipment loans outstanding, dairy producers with an ongoing need to replace many smaller capital items annually and operators who make numerous capital purchases annually. This product is not available for consumer type loans, which require truth-in-lending disclosures.

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Capital Lines of Credit Repayment Options

The capital line of credit will typically use one of the following repayment plans.

  • Percent of Principal.

    The customer will be billed a percentage of the outstanding loan balance at each payment due date, plus the accrued interest. For example, 2% of the outstanding principal each month plus interest.

  • Fixed Payment Amount.

    The customer will be billed a set dollar amount, which includes interest. This option works well with dairy assignments.

  • Fixed Principal Amount Plus Interest.

    For example, $500 per month plus interest. These loans can be written for up to 5 years at which time a balloon payment will be due. If the customer continues to qualify, the loan can be renewed for an additional revolving period, converted to a term loan, or the loan can be called due in full.

Credit Line Draft

With a credit line draft, you can access your loan to finance equipment, purchase supplies or meet other needs. It’s easy to access funds.

  • Access your funds to make payments similar to writing a check
  • Set up recurring transactions
  • Access images of your drafts electronically
  • Stop payments electronically
  • See your transactions posted to your loan statement

Agricultural Financing

Many may think of agricultural financing in the Delta area as primarily focused on rice and cotton, but we know local agriculture like global agriculture is diverse. We welcome agriculturalists of all scales. We work with them and their unique operations to better the agricultural economy in Northeast Arkansas and Southeast Missouri. Whether you farm 15,000 acres, raise organic produce to sell at the Farmers’ Market, run cattle, have poultry houses or raise honeybees, we offer agricultural financial products to help you grow and prosper.

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Capital Lines of Credit Pricing Options

Three pricing options will be available for Capital Lines of Credit.

  • Variable Rate (30 Day Adjustable).

    Customer’s rate may change on the first of every month. Customers are notified of rate changes a minimum of 10 days in advance of the effective date of a rate increase or not later than the effective date of a decrease.

  • Prime Indexed.

    Rate is tied to Prime for up to either 3 or 5 years.

  • One Year Adjustable.

    Rate is fixed for 12 months and automatically reprices to another 1 year adjustable product. This annual repricing continues until maturity.

Benefits of Capital Lines of Credit

  • Loan funds available with convenient draft option.

    You can access loan funds 24 hours per day, seven days a week by simply writing a draft. You can control the use of your loan funds.

  • You review benefit of draft float.

    By using drafts, disbursements are not charged to your loan account until the drafts clear the banking channels. This can save you several days' interest expense.

  • Flexible payment schedule.

    We can develop a payment plan that matches your cash flow. Your payments can be monthly, quarterly, semi-annually or annually.

  • Revolving line of credit.

    You may borrow and repay funds as often as you like prior to maturity. This allows you to manage your cash and minimize your interest expense. It also provides you pre-approved credit, which allows you to shop for items at your convenience and obtain the best deal.

A overhead shot of some farm land getting ready by machines
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