How Is AI Streamlining The Ag Loan Process?

Recent developments in digital technology and AI are streamlining loan underwriting and reducing costs for farmers.  Blaine Nelson, Chief Economist with Farmer Mac, said this is just the beginning.

“I think a lot about through the lender’s lens, just this need for a more efficient, a faster, smoother process and working with farmers, we're probably in the early stages of it," Nelson said.  "We've seen a lot of advancements made in the past several years. But when you think about the increased adoption of AI, I know that's a buzz word right now, but it's certainly going to accelerate some of these processes. Again, speaking purely to the lender side, just in how they actually underwrite a loan and work with a borrower on a loan.”

Nelson said the advancing technology has also made getting a farm loan faster.

“We're talking about shorter times from actual loan application to submission for a farmer," he noted.  "You're talking about more transparency in terms of what actually matters on a loan application. You're also talking about reduced costs in the number of instances, whether it be for the appraisal process or just the actual man hours required to underwrite a loan. If that helps bring costs down for the farmers and it makes it a more efficient, smooth process, I think it's a win-win for both.”

Nelson said putting it in historical perspective, Farmer Mac works behind the scenes to give farmers more and better choices.

“Farmer Mac was spun up in the 1980s really post-Farm Crisis to kind of help solve some of that liquidity issue that comes along with certain types of loans," Nelson said.  "So we like to think that we give options to lenders to offer farmers better rates. It's not always true, but you know, it certainly at times is and really, I think, just anytime that a farmer has a greater selection in terms of loan products, which we help banks offer or other lenders offer, again, it's the farmer that wins in that process.”

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