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Delayed Amortizing Advance

A flexible, fixed-rate amortizing advance that is easily customized by members. A delay feature has been added to the Bank’s Amortizing Advance product line which gives you control over the timing of the principal cash flows and for the repayment of the advance. Advance proceeds are made available on day one, but commencement of the repayment of the principal can be delayed for up to five years!

Terms and Conditions

  • $100,000 minimum advance size
  • Maximum term to maturity (including delay) up to 20 years
  • Amortization delay up to 5 years
  • Only interest is paid during the delay period
  • Level principal payments or level payment schedules available
  • Fully amortized
  • Available with or without a prepayment option

The Uses
Tailor your funding channels to deliver the services your customers demand:

  • Accommodate a front-end construction period
  • Match the duration of an agricultural loan
  • Finance a land or building purchase for an agriculture or commercial customer

Availability is one call away, so you can bid on deals and know you will get funds quickly and efficiently.

The Strategy
While you can’t control rates, you can control spreads and closely match the cash flows of the loans. When properly applied, the Delayed Amortizing Advance can be a sound choice for your institution.

Example One
Example One Blended Funding Model

Your customer wants to construct a new home. During the construction phase and start-up, they do not want fixed payments until the house is built and the old home is sold. Your institution can accommodate your customer’s and your internal funding needs by utilizing a 20-year fixed rate delayed monthly amortizing advance on a 19-year amortization schedule and incorporating a 1-year principal amortization delay.

Example Two
Example Two Blended Funding Model

Your commercial or agriculture customer is expanding and wishes to purchase some land or build a new building. Your institution has excess funds and wants to match the cash flows of the asset while maximizing spread. Your institution can accommodate your customer’s and your own internal funding needs by utilizing a 10-year fixed rate delayed monthly amortizing advance on a 5-year amortization schedule and incorporating a 5-year principal amortization delay.

 

If you have any questions, please contact your Vice President/Member Solutions.

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