Banks and Farm Credit lenders are typically rivals, but Huntington Bank and GreenStone Farm Credit Services have set aside their differences to come to the aid of Michigan fruit growers and processors.
The Columbus, Ohio, unit of Huntington Bancshares (HBAN) and the East Lansing, Mich., lender said Tuesday that they will offer low-interest disaster relief loans to producers and processors affected by widespread damage to their crops following bizarre spring weather. As a government-backed Farm Credit lender, GreenStone is prohibited from lending to companies that process and ship the fruit, so it will refer such loans to the $54 billion-asset Huntington and then participate in the deals, Travis Jones, GreenStone's chief financial officer, and John Irwin, a regional banking executive at Huntington, said in an interview Tuesday.
"Agriculture is a big part of the Michigan economy and we wanted to show that we could work together to be part of the solution," Irwin said.
Grape, peach and cherry crops were nearly wiped out and blueberry and asparagus crops suffered extensive damage when crops bloomed early due to warm winter weather and then were destroyed by early spring frost. A surprise spring snowstorm in northern Michigan added to the devastation, which is expected to cost the state's agriculture industry more than $200 million.
The lenders created the partnership in response to a law passed by the Michigan Legislature this month that promises the state will cover administrative costs for lenders that make low-interest loans to growers and processors affected by the crop damage.
Irwin said that lenders will offer creditworthy borrowers loans at a rate of 1% for up to five years and that no payments will be due for 24 months. Such loans will help growers and processors cover their losses for this year and help them get started on the next season, Jones added.
"This is a cash-flow play," he said.
Jones said lenders are expected to begin making loans in late summer, once the state funds have been appropriated. He added that all lenders in the state are eligible to participate in the program.