Should You Switch Your LIBOR Debt?
With the Euro Zone upheaval in the financial markets, farmers may want to consider changing any LIBOR based debt that they currently have or anticipate having in the future.
Almost all loans these days are based upon some type of index. The most common ones are the Prime Rate, LIBOR and some type of US Government loan index. For the last few years, loans tied to LIBOR have perhaps seen lower rates that loans tied to the Prime Rate or other indexes.
However, now that issues with the Euro Zone are getting more dire every day it seems, farmers may want to switch any LIBOR loans over to a more stable and possibly much cheaper index. To do this, you would need to check with your banker, but all farmers who have LIBOR indexed loans should at least check this out.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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