One of the biggest challenges when it comes to getting a potential new business off the ground is finding a way of funding your big ideas. Whether you need a cash injection for premises or stock to sell, or you need equipment to help your business operate at the highest level, there are a few options to choose from to help you on your way, including small business loans. Some of the options you could consider with small business loans include short-term loans, invoice discounting, or a company credit card. There is something to suit everyone. Below, we’ll explore how you can fund your business plan.
Equipment financing allows you to purchase new, up-to-date equipment for your business, spreading the cost so the payments are manageable. One example of this would be agriculture farm equipment loans. These loans allow for often incredibly expensive pieces of machinery to be purchased, whilst still maintaining cash flow and allowing for the continued smooth running of the business. Financing equipment is great if you need a specific machine or tool to help grow or improve your services but don’t have a large amount of cash to part with in one go. Financing breaks the cost into more manageable and affordable payments.
Small business loans
These loans are used to cover the cost of running a business. They can be used to expand your business or train new staff to help you on the road to success. Lenders often ask for different requirements when applying for a loan such as how long the business has been established, credit score, and loan purpose. The ability to meet these requirements means that you’re more likely to be approved for the loan, but with something to suit everyone, they are a great option for all business owners. Think about how much you need and how much you can afford to repay and compare your options to find the best deal for you.
When you provide a service to customers, it can sometimes take a while for your payment to arrive, which can contribute to cash flow problems. Invoice financing is designed to bridge the gap between your company and the customer’s payment. It works by lenders buying your invoices and uses them as collateral to loan you the money until the money has been paid. This finance option works well to help businesses to maintain cash flow. Although this option is generally more expensive than a business loan, it is a quick and easy process.
Inventory is the force behind any retail business. It helps businesses to make sales and keep customers happy. This finance option can help to provide your business with the funds to purchase extra inventory when needed. It helps to maintain cash flow and capital. It is important that a business can fulfil orders from customers all year round, so maintaining inventory is key when it comes to running a successful business.
The Perfect Investment: RAD Diversified and Income-Producing Farms
Amidst the global lockdown of 2020, Dutch Mendenhall, founder of RADD America, began looking for an alternative to standard residential real-estate investments. So, he turned his analysis to farms and was blown away by the immense potential he saw. After going public in late 2019, RADD America purchased US farmland and made slices of the real estate available at minimum investments of $10,000.
Income-producing farms vs. other real estate asset classes
According to Mendenhall, an apartment complex in today’s US real estate market commands approximately a 4% or 5% cap rate. Farms offer somewhere around a 15% to 20% cap rate.
“When I first began looking at investing in farms, I compared each acre to an apartment or housing unit,” Mendenhall recalls. “The variety that income-producing farms provide is what I really love about them as an opportunity. With one season producing wheat and corn the next, you can double tap — you can raise livestock on top of agriculture. Putting money into the farm only pays off in time. Everything from improving soil to increasing irrigation makes a major impact on potential income, and so much of America’s farmland has fallen into disrepair during the last 20 years.”
When Mendenhall began investing during the early days of the pandemic, sustainable acres of producing farmland sold anywhere from $3,500 to $5,000. Today, he finds that income-producing acres of farmland easily sell for $9,500 to $10,000.
“I’ve seen farmland values almost double during the last couple of years,” Mendenhall says. “Currently, we’re in Tennessee, Arkansas, and Idaho, but we are analyzing land all over America. What reports don’t show is the difference between a properly maintained acre of farmland and an acre that is in disarray. There’s only so much workable farmland on the market today. We’ve hit the tipping point, and now, there’s a scarcity of land for people to buy. If you have the opportunity to purchase amazing agricultural land, you have to pull the trigger quickly.”
Income-producing farms as an asset class
Mendenhall is no stranger to investors. Since 2006, he’s connected them to deals in short sales, wholesaling, residential properties, and storage units, though he admits that every asset class has caused the same excitement as farmland. “At this point, we can’t find enough bargains for our investors,” he says. “They take real pride in their investments and keep asking us for more.”
RADD America takes a true grassroots approach when connecting its investors to farmland. “The farming world is different from any other in real estate,” explains Mendenhall. “We start by having our acquisitions and agricultural teams meet with farmers. When we get ready to brand cattle or plant, all the local farmers come and help. In the same spirit, our teams go out and help the local farmers when it’s their turn to brand and plant. To do it right, you have to build a relationship and a connection that’s quite different than other types of investing.”
RADD America is composed of expert investors and expert farmers. The company offers its investments through fractionalized ownership. In other words, the company purchases one farm and then allows a joint pool of investors to own it together.
“If you don’t have a team that knows how to farm and maximize income, you’re not going to get the best possible return for investors,” warns Mendenhall. “Thankfully, our team isn’t so big for this type of investing that we forget who we are, and we have the economy to scale at a great pace.”
The impact of global competition on income-producing farm investments
RADD America closely monitors global trends. In Mendenhall’s experience, investors win when they move before the market. However, when they move after the market, they lose.
“When Russian first invaded and sparked its war with Ukraine, for example, we kept a close eye on its global impact,” he says. “As one of the largest producers of wheat in the world, we knew that Ukraine — now in the midst of a war — wasn’t going to be able to produce wheat at the same scale, so someone else needs to step in and fill the gap. We’re constantly monitoring what’s happening in the world to stay on top of evolving trends.”
In terms of global competition, Mendenhall is frustrated by foreign entities staking ownership of American farmland and agriculture. In this area, China has positioned itself as the number one threat to the sovereignty of the United States.
“When foreign powers have ownership of agricultural land in the US, it puts us all at risk as Americans,” remarks Mendenhall. “Over the past few years, we’ve seen soil quality erode, closures of meatpacking plants, and numerous fires. The likelihood of nuclear war in this age is very small. The quiet war of buying American agriculture and unsettling the American dollar is the threat we face today.”
Clearly, RADD America has a lot to pay attention to at home and abroad. “We’re monitoring weather patterns and making one-year, three-year, and five-year predictions,” Mendenhall explains. “We’re also paying close attention to interest rates to see where this shifting economy is headed. The up-and-down cycles are faster than they’ve ever been. Monitoring the industry is critical. With expert investors and agricultural specialists from RADD America on your team, farmland can be one of your most promising and rewarding investment opportunities.”
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