“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do.” – Pele
Last month on the Equi-Business blog, we talked about obtaining financial lending in pursuit of an equine property goal. We began with the reality that the equine business is a challenging industry for traditional banks to provide financial support. For young people with the goal of creating a business in the horse industry, the lifestyle can be one filled with many rewards. Equine industries are also a good way of making a piece of land pay for itself – but none of it comes without proper planning, hard work and often, sacrifice.
Last year WHR spoke with some couples in the horse industry who faced the daunting task of obtaining financial support for a farm or ranch, to help elevate their horse businesses to the next level. Each faced their own hurdles as they went through the process.
Austin and Sara Seelhof run a successful reining horse training facility in Bottrel, Alberta. Austin focuses on training, showing and selling futurity and derby horses, and has a successful coaching program for non-professional riders. His wife, Sara, owns Be Better Equine Therapy which specializes in therapeutic thermal imaging for equine athletes. They are also the proud parents to three young children. Originally, Austin ran his burgeoning training business out of Lauder Ranch near Cochrane, AB, but the Seelhofs recognized the need to invest in more equity while growing their business and investing in their future.
In March 2017, the couple purchased a 50-acre property in Bottrel, Alberta that includes a house, a 110 x 220 arena, an existing barn and a shop. The property fit many of their requirements, including a wonderful school for their children nearby.
Austin says that when they began to think about properties he had originally wanted to buy land and build on it. They went through Farm Credit Canada (FCC), with the help of a great mortgage broker. However, the FCC was leery about financing a property that would need to be built upon and the Seelhof’s wouldn’t have been able to come up with a big enough down payment. The acreage they decided on was much easier to receive financing for through the FCC.
The FCC also had a “Young Farmers Loan” program at the time that liked to assist agriculturists under 40 in keeping their family in agriculture. The Seelhof’s had a solid business plan that showed steady growth in the last six years, as well as a side business in compressed hay that could be run from the property. The couple did look at other banks who offered good interest rates, but Austin says, “We chose Farm Credit because of their flexibility. You can stall payments, and we really felt like we were a person with them, not a number. They have different programs available so if you are having trouble paying, or you break your leg or something, they can be flexible and add payments on to the end if need be.”
Another added bonus of using FCC was that the lending institution would value the entire property, while many banks won’t value outbuildings in their property assessment. For the Seelhofs, this meant that their barn and arena wouldn’t be included in their loan – not ideal for a family who makes a living training horses.
Austin says, “One thing I wish I would’ve done sooner was to talk to a banker. My dad always said that you need a relationship with a banker, or an accountant or mortgage broker. At first it was really scary, but it was helpful to have a great mortgage broker to guide us.”
Alex and Sonja Alves operate Hat Creek Performance Horses on the Hat Creek Ranch in Wheatland County, 30 minutes east of Strathmore, Alberta. They offer horse training from colt starting to finishing, with access to cattle, pasture, trails and obstacles. As well as lessons, cowboy challenge and flag practice nights, Hat Creek also takes in horses for resale, all the while slowly building a breeding program on strong bloodlines. The Alves ranch has 80 acres of which 50 are hay crop and 30 are pasture. The Alves’ purchased the property on August 31, 2012 after the previous owners had moved six years prior. The property had a calving barn that was too low for horses, a complete corral system to run cattle, a shop, a craft shop that had been used to make saddles and an outdoor arena that had become overgrown. Despite small modifications, the Alves’ felt the property had potential and Hat Creek was ready for them to bring horses in immediately. It needed few upgrades for cattle. Another bonus was that, at the time, Alex was working towards getting his welding journeyman and B-Pressure and the shop was perfect for his set-up.
Alex and Sonja have three children. Alex grew up in the horse industry and immersed himself in various events. It was always a dream of his to be able to make a living training horses, however it didn’t always seem feasible which is why he became a welder as well.
By the end of 2015 they had built an indoor arena on their property and by 2016 they training was their full time profession.
The Alves’ did hit some snags when attempting to purchase their property. Due to Hat Creek being 80 acres and set up mainly for cattle, agricultural lenders considered it a hobby farm. Other lenders saw it as an acreage and therefore, agricultural. So, as Sonja states, “It completely fell through the cracks of the lending world. Being that we were 25 and under at the time, lenders had no interest in lending us money. The next catch was that we had to have 20% down.”
Alex and Sonja had to put together a business plan, and present it to the Agricultural Financial Services Corporation (AFSC) who offered a great interest rate of 1.86%. In order to acquire financing, the plan had to show that it was possible to generate at least $15,000 in revenue off the property so that they could be considered agricultural.
“At the time we only had about 10% to put down, so we got a loan through my parents so we could have the down payment and purchase the property. We honestly had to find a back road to be able to purchase the property. We spent at least a month-and-a-half trying to find a way to get financed. It was a nightmare.” For the Alves’, Sonja says that there is a lot of advice for young couples, and some of it seems to be repetitive in nature.
“For us, I think it is important to remember that if you wanted it bad enough there will be a way, no matter how many doors get shut right in your face, there will be a back road open. At the end of the day, success can only be achieved one way and that is through hard work. Alex says it so well, ‘You never fail, it just gives you another chance to succeed.’”
When Equi-Business returns, we’ll start discussing the important and elements of a business plan. ’Til next time!