We have a husband and wife(Bill & Jo), who set up an LLC (Machinery, LLC) that will purchase farm machinery and then lease the machinery to a farm operating entity. We have two loans for them to purchase machinery at this time.

Normally we consider an entity that purchases and leases farm equipment as an agri-business and code it as commercial/small business.

But in this case, the couple(Bill & Jo) are also 55% owners of the only farming entity (Farm Partners) that the new LLC (Machinery, LLC)will be leasing the machinery to. So in theory they are buying the machinery in the name of one business and leasing it to farming operation that they own.

Basically, the only reason for the formation of the new LLC(Machinery, LLC) is to purchase machinery and lease it back to the farming operation (Farm Partners) for tax purposes, so technically we could say that the purpose of the LLC is business since it is only purchasing and leasing equipment and the loans to purchase equipment are commercial loans.

Would you agree these should be commercial loans since the purpose is to purchase and lease equipment, or would it be Ag since the individuals (Bill & Jo) who own the LLC (Machinery, LLC)will also be a part of the operation (Farm Partners) who will be the end user of the equipment and using to farm.