This is an inventory financing program whereby a group of individuals will form a partnership, LLC or Corp for the purpose of finishing iso-wean/feeder pigs.
Producers Livestock Credit Corp (PLCC) will finance 100% of the cost of the pig and up to 70% of the value of the finished market hog as long as the borrowing base supports it, the hogs are price protected (hedges or cash flow contract) and 30% of the finishing cost is in our payment plus account prior to the purchasing of any pigs (interest paid and compounded quarterly). None of the pigs may be commingled with pigs financed by another financial institution. PLCC will not be involved if there is split financing. All of the investors must be credit worthy by PLCC judgment as each investor will be responsible only for his percentage of the debt. The investors must have an individual/company who will pay all of the bills (except cost of the pigs) and PLCC will reimburse them once a month once an invoice is received.Example:
If the cost to finish the iso-wean to 265lbs is $100, PLCC will require $30 to be deposited in PLCC's payment plus account before any pigs are purchased and these proceeds will be used as collateral for our loan. These payment plus funds cannot be withdrawn and will be used only to keep the PLCC loan at 70% of collateral value. As the pigs are sold and the equity builds in the payment plus account, the investors may be able to withdraw some funds.
If the investor's wants to fill 5 - 1200 head barns (6000 pigs) with iso-wean pigs at a cost of $35 per pig, he/they will need to deposit in our payment plus account $180,000 as this represents 30% of the cost ($100) to finish the 6000 pigs. As the pigs are purchased (assumed they are all purchased at the same time) PLCC would pay the invoice for the cost of the pigs or $210,000. It would be optional to use some of the payment plus funds to reduce the loan to $147,000 or leave the $63,000 in the payment plus ($63,000 represents 30% of the cost of the iso-wean). As monthly bills are submitted for the feed and other miscellaneous cost, PLCC will once again advance 100% of the bill up to 70% of value of the finished hog. Once PLCC is at the 70% level then funds from the payment plus account will be used to keep the PLCC loan at 70% of the value of the finished market hog. If at anytime during the finishing period the loan amount exceeds more than 70% of the collateral more funds will be withdrawn from the payment plus or the investors will need to pay the loan down to 70% of the collateral value if the payment plus funds have all been withdrawn. Inventories along with the borrowing base will be completed every month and submitted to PLCC office.
Territory East of Des Moines, Iowa
Territory West of Des Moines, Iowa