Turn the tables and seek insightful answers to better manage your farm
Do you feel like you’re in the hot seat any time you sit down with your banker? Instead of feeling vulnerable, be armed with your own questions. Use your lenders’ unique and valuable perspective to increase your financial acumen and discover a few new best practices.
“Your lender should be an indispensable partner in helping you grow your operation,” says Jessica Lehman, director of agribusiness banking at First Financial Bank . “You want someone who can provide perspective that will be both honest and beneficial.”
Be proactive in your dialogue and remove surprises with strong communication. Share the challenges you are facing, says Ben Pagel, president and CEO of Northeast Security Bank. “We don’t care how good it is or bad it is, just tell us how it is.”
Lehman, Pagel and Ashley Arrington, founder of ag consulting firm Agri Authority, suggest asking these questions when you meet with your lender this fall and winter.
- Where do I stand compared to peers? How do I stack up against everyone else?
- Are other farmers having the same problems I am?
- What do you think is my operation’s biggest weakness?
- What do you think is my operation’s biggest strength?
- Are my loans structured correctly for the low-margin industry we’re in?
- Has anything changed from last year in terms of lending standards? Are you offering any new programs? Have any of your processes changed?
- What is your loan approval process? What are the hot button issues for your committee?
- What do you base your loan rates on?
- How could the outcome of the presidential election affect your bank? Do you expect your lending capacities to change?
- How do you view government payments, such as (Market Facilitation Program) MFP or Coronavirus Food Assistance Program (CFAP), on my balance sheet? How do they affect my creditworthiness?
- What financial metrics are most important to you? What ranges should I aim for?
- Based on my whole borrowing portfolio, what could I do better? Could I improve my cash flow?
- As an ag lender, what keeps you up at night?
Numbers don’t lie but they rarely tell the whole story. Proactively share the story behind the numbers with a loan narrative. To learn the steps for a top-notch narrative, visit AgWeb.com/loan-narrative
