As the sun heads down after a long day on the farm, Freddy begins to think about all of the things he intended to get done that day, but didn’t. “What can I do to make things more productive around here?” he ponders aloud as he opens the door to his house.
“What was that, Dad?” asks Pebbles, his ever so inquisitive daughter.
“It’s nothing,” replies Freddy. “I’m just trying to think of a way to get things moving a little quicker on the farm. These long days are exhausting but I still feel like I’m not getting enough done. I know we have the potential to produce a lot more than we do.”
“You have been working pretty hard and you’re not getting any younger,” replies Pebbles with a wink.
“A very flattering observation thank you Pebbles. I’ve actually been thinking about this for a while now though and, if I had the money, another tractor would fix everything. But unless I win lotto that’s just not going to happen,” sighs Freddy.
“Dad, have you considered getting a loan?” asks Pebbles.
“I don’t like taking on more debt, Pebbles, you know that. And besides, I already have an overdraft.”
“Nobody likes debt but think about all you could get done in a day with a second tractor. Jim can drive the old one; you would be twice as productive! And you wouldn’t even need to get another loan; you could simply increase your overdraft. I’ve seen your books and, when you take into account the assets of the farm, the debt you have really isn’t that bad,” comments Pebbles.
“I guess it’s an option, but how would I go about arranging that?” asks Freddy.
“Well, the first thing you would need to do is talk to your Bank. If they think increasing your overdraft is appropriate they will send the loan documents to your solicitor. In your case, those documents will likely include a Letter of Offer or Loan Contract, a copy of the standard Terms and Conditions of the loan, a Solicitor’s Certificate and possibly a Guarantee Form which you may have to sign personally guaranteeing the debt (as I presume your trust will be borrowing the money).”
“Will I have to give any security over the farm’s property” asks Freddy.
“It is likely that the Bank already has security over the land and your personal property and, while I may be wrong, that existing security should be sufficient to cover the increase in overdraft,” explains Pebbles.
“This may be worth looking into. Can we discuss this further next week?” asks Freddy.
“Absolutely,” replies Pebbles. “And in the meantime, I can start helping out on the farm.”
“That sounds great. Thanks Pebbles,” replies Freddy.