Here are some frequently asked questions:
What makes Harvest Capital Company different?
Harvest Capital Company strives to match the financing needed today to a structure that will benefit you in the future. We understand that each transaction and each borrower is completely different but whenever possible we believe that operational and short-term assets should be financed with short-term debt and likewise with long-term assets. We also believe that it is very beneficial to the borrower to separate specific parcels of real estate with separate loans so the operation doesn’t have all of its real estate holdings under the same note and mortgage with one interest rate instrument.
What are your interest rates?
All of Harvest Capital Company’s loan products are priced off of a spread or margin above the yield curve for United States Treasuries. As a result, rates change on a daily basis. Today’s yield on Treasuries can be found at a number of sources including Bloomberg and the Wall Street Journal.
Actual note rates to the borrower are typically between 2.0% and 3.5% over the yield for the Treasury instrument that corresponds to the adjustment period. For example, a five-year adjustable rate would be 2.0% to 3.5% over the rate for the five-year Treasury bill. To view the latest US Treasury rates visit Bloomberg.com.
Do you write loans for cattle, equipment, or operating lines of credit?
We offer a Revolving Line of Credit (RLOC) product that is secured by a first position mortgage on real estate. It can be utilized to purchase equipment, cattle, real estate, general operating expenses or all of the above. The minimum loan size is $200,000 with draw line terms of five or ten years with the total term being thirty years. The interest rate is variable during the draw period and is based on a one-month LIBOR. The balance of the loan is converted to a term loan after the draw period with semi-annual principal and interest payments.
What are your payment structures?
Payments can be made on an annual, semi-annual, quarterly, or monthly basis depending on the type of loan. The most typical structure involves semi-annual payments with amortization schedules of fifteen, twenty, or twenty-five years and a fifteen-year term (balloon). We also have the ability to use fixed principal payments in certain situations.
Do you have prepayment penalties?
Most of the loans that Harvest Capital Company originates do not have prepayment penalties; however there are times when prepayment penalties are a necessary part of the mortgage. Typically these notes allow payment in full without penalty on each interest rate adjustment date. In either situation you can rest assured that Harvest Capital Company is looking out for your best interest. We do everything possible to limit our customers’ exposure to penalties and fees.
What is the maximum loan to value?
This will depend on the particular transaction. The maximum is 70% of appraised value, however, most loans fall into the range of 40% to 65% loan to value (LTV).
Do you write second mortgages?
All of our loans are secured by a first mortgage position on real estate.
Will I need to have my property appraised?
Unless an acceptable appraisal has been published within the past year, a new appraisal will need to be completed. These typically cost from $4,000 to $8,000 per appraisal.
What are the closing costs?
Closing costs are generally between 1.50% and 3.50% of the loan amount. This includes any and all costs associated with the placement and closing of the loan including all origination fees, title insurance, escrow, legal, appraisal, and any other miscellaneous costs. The percentage of loan closing costs decreases as the loan amount increases. Harvest Capital Company will be able to give a very accurate estimate of closing costs at the time you make a formal application for a loan.
Are there any up-front fees?
Two fees may be required before commitment:
- Lender’s application fee is typically due when an application is signed; however, this fee is refunded (less hard processing costs) if the loan is not committed.
- The appraisal fee is collected when an appraisal is engaged.
Loans are either committed based on an existing appraisal or subject to a forthcoming appraisal. Harvest Capital Company’s goal is to keep your financial exposure to a minimum until you have a loan commitment with which you are comfortable.
How do I get started?
In order for Harvest Capital Company to evaluate your financial condition, the following information will need to be provided for each individual and financial entity involved in the transaction (See our application checklist for more details):
- Current balance sheet including:
- detailed explanations of assets and liabilities including interest rates and terms,
- debt payment schedules with a breakdown of principal and interest payments, and
- independent verification of balances from copies of billing statements.
- Three to five years of historical tax returns;
- Year-to-date income statement for the current year;
- Budgeted income and expenses to close out the year; and
- Budget for the next year of operations.
The following information will need to be provided for the proposed security:
- Legal description;
- Historical production records;
- Tax Assessor statements;
- Description of improvements; and
- Copies of water rights.