This bank will take cheese as collateral
(This post originally appeared on The Washington Post)
Equipment. Real estate. Accounts receivable. Inventory. These are all good forms of collateral if your business is looking for a bank loan. But if you’re finding yourself a little short of these assets maybe you can make up the difference with a little cheese.
Cheese happens to be an acceptable form of collateral if you’re seeking a loan from Credito Emiliano bank in Italy. Take Mauro Rossi, for example. His small business – Gavesetto – produces about 20,000 “wheels” of Parmigiano-Reggiano (the so-called “king of cheese”) in the Emiliano region of Italy every year.
According to this really fun video by Great Big Story, when cheese producers like Mauro need a loan they often go to Credito Emiliano. What kind of collateral does Credito Emiliano accept? Well, you’ve likely figured out by now that besides the typical forms, it also takes wheels of cheese. In this part of the world, cheese is a serious asset. Parmigiano-Reggiano cheese, for example, needs to be aged 18-36 months. Just one wheel could be worth thousands of dollars, so it’s not a bad investment for a bank.
“We are a traditional bank active in supporting Parmigiano-Reggiano producers,” Fausto Filippi, a banker from Credito Emiliano said in the Big Story report. “The decision to use Parmigiano-Reggiano for this type of credit program is simply due to the fact that this is a typical product that is unique to this area.”
Talk about a bank that knows its customers and understands their inventory.
One problem is storage. This is cheese and it needs to be kept under very precise conditions. A vault or a cash drawer will simply not be acceptable. So instead the bank uses the special cheese warehouse of Tagliate General Warehouses – another small business who specializes in this kind of thing. Tagliate’s warehouses are filled with about 360,000 wheels of the stuff, valued at more than 160 million Euros. Their job is to protect the collateral…literally from cow to the bank. Who knew so many people could make money off a wheel of cheese?
Creative financers like Credito Emiliano come up with innovative ways to help their clients grow. You wouldn’t think of cheese as a form of collateral. But it is. Who knows what other forms of collateral your bank might accept to secure your next loan?