“We take horses as collateral all the time.” That’s Middlefield Bank vice president Al Thompson Jr. explaining how his institution works with Amish customers.

Apparently, that practice goes against what lenders are taught (“never take anything for collateral that eats”). But for the Amish, the exception is worth it. “If they offer you the horse, you take the horse,” says Thompson. “That’s their transportation, after all.”

This is from a Crain’s Cleveland Business article on why Amish make attractive customers to banks.

5 Facts on the Amish & Banks

These are based on interviews quoted in the article – with several bank executives who work with Amish customers in the Geauga County community, and a spokesman for an Ohio bankers’ trade group.

1. First of all is the simple fact that Amish use banks. This may be obvious to those who know the Amish. But I’ve found that some can imagine they operate on a barter basis, or a cash-under-mattress system. Amish borrow from banks and going to the bank is a regular errand. You’ll see Amish buggies in drive-through teller lines, like in this photo:

A checking account is a normal thing for the Amish. For that matter, many Amish have credit cards, especially in larger and more progressive communities.

Amish have in fact even been involved in bank ownership – the best example is the Bank of Bird-in-Hand, which opened in 2013. At the time it was the first new US bank to open in three years, following the late 2000s financial crisis.

2. Amish people get loans for Amish types of things. What does that mean?

The most obvious would be the “first horse-buggy loan” as one bank president describes it. Others would be for other essentials like business or home purposes. And bankers are generally glad for the Amish business, because they view the Amish as very low-risk.

This probably stems from two main things – an ethic that stresses hard work, honesty, and doing the right thing (as in repaying debts in a timely manner), and also the community support that is integral to the Amish. This can mean that individuals might get assistance to pay off debts in particularly trying circumstances. It means lenders to the Amish are more willing to make exceptions, knowing such business is a good bet.

wisconsin amish barn raising

Image: Dorothy Robson, Westby Times

3. Bankers adapt to these valued customers by adjusting business hours. The article cites the examples of a 5 AM phone call, or a 7 PM in-person meeting. Amish farmers keep different hours than most people, and bankers are willing to adapt to their schedules to catch them when they are most available and ready to take care of business.

4. Amish lendees tend to pay off debts quickly. While they might not put as much money down, paying off a 30-year mortgage in just 20 years is common. From the bank’s perspective, that reduces the risk of a lower down payment. In a business which is about managing risk and making good decisions on who to give money to, this matters.

5. Finally, bankers view the Amish as loyal. Middlefield Bank has had third and fourth generation Amish customers coming for loans. The banks repay that loyalty in turn. Even though financing a buggy might offer less return than a commercial loan, these banks are wise not to disregard that need. “If you take care of them, they will be very loyal to you,” says Geauga Savings CEO Jim Kleinfelter.

Thompson adds that he’s never had to repossess a horse.

Read the article in full here.

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