Farm Incorporation

[ckd129]

Hi,

Just trying to learn about farm incorporation and the pros and cons. I am particularly interested in the liability issue.

Do creditors now require personal guarantees from incorporated farms? What has been everyone's experience?

Thanks,
ckd129

[FarmRanger]

If your farm corporation is flush with equity, you’ll have a better chance of negotiating away any personal guarantees. If you want to want to run a barebones corporation with lots of debt, while keeping most of the hard assets out of the company, then you’ll have a harder time not signing a personal guarantee. If this is the case, I would be asking for my guarantees back from the bank in a few years when the debt load of the company comes down and equity rises. It all depends on how attractive a borrower you are, if you are wanting to leverage a lot, then you’ll probably need to guarantee the loan.
Consult a good accountant before incorporating, this is probably the best money you will spend in the whole process.