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What Are Operating Lines of Credit?

These are short-term loans used to finance customers’ daily business operations. Operating Lines of Credit customers access loan funds with drafts that can be used seven days a week, 24 hours a day. Full-time farmers and part-time farmers with off farm employment may also use the loan for living expenses, education, unexpected medical expenses, hedging account financing, etc.

OPERATING LINES OF CREDIT AVAILABLE

  • Operating Expenses
  • Working Capital

ADVANTAGES OF OPERATING LINES OF CREDIT

  • Pre-Approved Line of Credit
  • Immediate Buying Power
  • 24/7 Access To Funds
  • Interest Charged Only On Funds Spent
  • Revolving Lines of Credit
A harvesting machine working in the dark with its lights on

Who is eligible for Operating Lines of Credit?

Operating Lines of Credit are available for a wide range of individuals and entities eligible for Farm Credit Midsouth loans. In addition to full and part-time farmers, this product can be used for aquatic producers, harvesters of forestry products, providers of farm marketing and processing services and other farm-related businesses.

More about Operating Lines of Credit

The loan may be secured or unsecured as required by credit procedures. Typically, loan term match the customer’s operating cycle. Revolving lines of credit (RLOC) can be established for up to 3 years, and possibly longer, if permitted by association policy.

Disbursement can be made throughout the loan’s term and payments of interest are due at least annually. On multiple-year revolving line of credit (RLOC), the loan should be paid to a minimal balance annually. The outstanding balance plus accrued interest is due at maturity.

a close up of crops with a harvesting machine in the background

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.


Payment Calculator

Please contact us for current interest rates.

Parameters

Principal
Interest Rate
Schedule
Term

$1,703.37

Each Payment

$313,212

Total Interest

$613,212

Total Payment


Operating Lines of Credit Pricing Options

VARIABLE RATE (30 DAY ADJUSTABLE).

The 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 and not later than the effective date of a decrease.

  • Rate Is Determined by the Association
  • Monthly Repricing Frequency
  • 63 Months Maximum
  • Revolving and Draft Options Available

FIXED RATE.

Available for customers with maximum terms up to 15 months. The loan should mature at the end of the fixed-rate period.

  • Rate Is Determined by the Association
  • Yearly Repricing Frequency
  • 15 Months
  • Revolving and Draft Options Available

PRIME INDEXED LOANS.

The customer’s rate will be indexed to the Prime Rate as reposted in the Wall Street Journal. The rate will be adjusted on the first of every month on the Prime Rate as of the 10th of the previous month. The index margin, which is the difference between the customer’s rate and the Prime Rate, may be adjusted every 12 months. Customers are automatically notified of rate changes 10 days in advance of the effective date of the rate change.

  • Rate Is Determined by the Association
  • Yearly Repricing Frequency
  • At Repricing, Loan Automatically Converts to a Variable Rate.
  • Revolving and Draft Options Available

ADJUSTABLE RATE.

The rate is fixed for 12 months and then converts to variable (30-day adjustable) for the remaining term. This product may also be for existing loans who wish to fix the rate 12 months. It is generally used for customers with revolving lines of credit (RLOC) with terms of 15 months to 5 years. Customers are notified of the rate change and new pricing options a minimum of 10 days before the effective date of the price change. Customers can elect to fix their rates for additional 12-month periods by signing a conversion agreement.

  • Prime Rate as Quoted In the Wall Street Journal
  • Monthly Repricing Frequency Based on Prime as of the 10th of the Previous Month
  • 63 Months Maximum
  • Margin to Prime in Automatically Reset Every 12 Months.
  • Revolving and Draft Options Available

What Are The Operating Lines of Credit Plans?

Two different types of Operating Lines of Credit plans are available for customers, depending on credit quality and customer needs. The plans are listed here in order from highest quality/flexibility to lowest quality/flexibility.

REVOLVING LINE OF CREDIT. The customer is given a credit line that can be outstanding at any one time. The customer can borrow and repay as often as necessary as long as the balance outstanding doesn’t exceed the credit limit.

DECLINING BALANCE LOAN. Allows for disbursement of funds until the cumulative disbursements total the face amount of the note.

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

Benefits of Operating Lines of Credit:

  • LOAN FUNDS AVAILABLE WITH CONVENIENT DRAFT ACCESS.

    You can access funds 24 hours a day, seven days a week by simply writing a draft. There is no need to call or stop by a branch to obtain money. You can control the use of your loan funds.

  • MONTHLY STATEMENTS.

    Our conveniently monthly statement helps you keep track of when your funds were used, plus the amount of your credit line that is still available for use.

  • CUSTOMER RECEIVES BENEFIT OF DRAFT FLOAT.

    By using drafts, disbursements are not charged to your loan until the drafts clear. This can save your several days’ interest cost.

  • FLEXIBLE PAYMENT SCHEDULES WITH STANDARD PAYMENT PLAN CHOICES INCLUDING MONTHLY, QUARTERLY, SEMI-ANNUAL OR ANNUAL PAYMENTS.

    We can develop a payment plan that fits your cash flow and production cycle.

  • REVOLVING LINE OF CREDIT FOR CUSTOMERS WHO QUALIFY.

    You may borrow and repay funds as often as you like prior to maturity. This allows you to manage your cash needs and minimize your interest cost.

Frequently Asked Questions about Operating Lines of Credit

WHAT HAPPENS TO MY RATE WHEN I RENEW MY LOAN? At renewal, you may select the pricing option you desire. You control the amount of interest rate variability that best meets your needs.

CAN I USE FARM CREDIT MIDSOUTH CHECKS ANYWHERE OR WILL I HAVE A PROBLEM CASHING THEM? Our drafts are widely accepted and are similar to business checks. If you ever have a problem using a draft, just call us and we will do whatever is needed to help you.

WHY DO YOU REQUIRE THAT DRAFTS MUST BE WRITTEN FOR AMOUNTS MORE THAN $250? Drafts offer a convenient tool to access your loan funds. However, they are not designed to replace a checking account that you may want to use for small amounts or personal reasons. This allows you to separate your business and personal activities, which complements bookkeeping and tax planning.

A overhead view of a field being harvested by machines
A row of sunflowers with a field in the background being watered
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