Get Your Plan Together Before Meeting the Banker

One of the most encouraging features of farming is: there’s always next year. Despite challenges in 2019 and 2020, 2021 is fresh, new and full of potential. Don’t be downtrodden after a tough season, look ahead to what the 2021 season can bring by planning today.

Take notes from the combine, review them throughout the year and get your questions answered by agronomists and company representatives. However, before you start pulling the trigger on different inputs and management practices, make sure you have secure financing or cash to pull off next season.

Go into conversations with lenders prepared, honest and ready to answer tough questions. The past several years have been tight — bankers know that — have a plan for repayment and contingency plans to build lender confidence.

Come prepared

Know where you stand financially. At the very least, put together a balance sheet that reflects, as closely as possible, your working capital position before you visit your lender.

“Don’t tell your banker fairy tales,” says Curt Covington with Ag America Lending. “Your banker is well aware of what’s going on in the industry and local community. Your banker wants to hear the truth.”

Covington and Greg Hoover, Rabobank general manager of the input finance business, say to bring the following information to the table:

  • What was your production in 2020?
  • What do you think you’ll sell the 2021 crop for?
  • What working capital do you have available?
  • Do you have any marketing contracts already lined up?
  • Do you have any current unpaid debts that need to be addressed?
  • What crops do you plan to grow?
  • What cost-cutting measures do you plan to take?
  • What is your contingency plan if the crop fails or commodity prices tank?

“Those are the elements I would bring forward,” Hoover says. “Make sure you have a good balance sheet and a couple years’ worth of information to share. Having those elements will probably help you get larger [credit] limits than the initial limit.”

When it comes to having cash on-hand, cash is always king. Showing banks you’re willing to put your own cash up is a great way to build lender confidence and both experts advise that you don’t use it all at once though, keep some as a backup.

This whole idea of working capital as part of the plan is really important because that working capital is your defense against commodity price volatility,” Covington says. “Having the proper amount of working capital can help a farmer suffer through some of these tougher marketing periods.”

Communicate and plan ahead

Start talking with your banker now and work through a variety of scenarios. Use your budget information to aid input and crop decisions. In addition, if your situation changes throughout the year after you get the loan, talk to your banker so no one is blindsided.

“Prepare as much as you can for things you can’t control,” Hoover says. “For example, free up capital by buying inputs when the time is right and look for discount opportunities like buying early.”


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