As you prepare to close the books on this year, you’ll soon shift your attention to 2020. A good rule of thumb is to start planning your finances at the same time you start your agronomic plans for the next year, says Jessica Lehman, managing director of agribusiness banking, First Financial Bank in Fort Wayne, Ind. Impress your lender this fall by taking the following steps.
Know Your Numbers
How much money do you need to operate? “If you are projected to spend $200,000, don’t demand $220,000,” says Ashley Arrington, founder of Agri Authority. “Don’t take the low road either; if you ask for too little and have to keep coming back, you don’t appear to be a competent manager.”
Understand your key financial metrics, Lehman adds. This includes your break-even points, fixed and variable costs and depreciation. “If you struggle with financial statements, ask your lender to go through them with you,” she says.
Bring Important Documents
Bring every document you think they will ask for and then some, Arrington suggests. This can include three years of tax returns, financial statements, yield history, results/actuals from the prior year and planned acres for the upcoming year. If possible, bring copies of contracts you have for your crops.
“If you bring everything the first time, they will not be constantly calling you for more information and can actually get your loan done,” Arrington says.
Ask Questions and Be Ready to Answer
Your banker’s job is to know and understand your operation. Don’t be offended if they ask you pointed questions about your financial situation.
“Also, feel free to ask the banker questions,” Arrington says. "Research and analyze your options, and then you can be first in line at the banker’s door to get a deal done.”
Be Honest and Open
Financial shortfalls and budget revisions happen. “If one of the loans on your statement is a shortage/carryover from a prior year, explain it,” Arrington says. “Similarly, if you know there will be some negative items on your credit report, explain how and why they are there. The banker will respect your honesty.”
Farm Journal columnist Peter Martin shares what to include in your loan request at www.AgWeb.com/loan-request