June 15, 2018

How To Be A Good Borrower

 |  By: Curt Covington

Does your lender have an obligation to lend you money? Is building a relationship with your lender based on mutual respect overrated?  These questions probably seem a bit ridiculous from a dairyman’s perspective but lenders sometimes feel as though the obvious is overridden by reality. The obvious answer to all of these - NO!  

When it comes time sit down with your lender to review last year’s results and plan for next year, here are a few “can’t miss” suggestions.

1. Get your financial house in order before you meet with your lender.  It is your responsibility to have all relevant and needed financial records in order and current.  These records will likely include, at a minimum, a balance sheet, income statement and cash flow projections for the coming year.  

2. Know where the furniture is in the house.  Providing the financial records to your lender is one thing; knowing what is in those financials is another.  You must know and understand as much detail as you can about your financial condition.  Your financial records are your financial records, not your accountant’s.  

3. Plan your ask. Know what financing you want for the coming year.  It is not your lender’s responsibility to propose what you need, but it is their job to act on your need.  So, your ask should include an appropriate and supportable amount of herd and feed financing along with any financing needed for equipment or proposed land purchases.

4. Follow through and follow up. If your lender requests that you provide a list of things in order to finish the loan application process, then make it a priority to get it done ASAP.  In those cases where it may take some time to compile information, it is always a good idea to communicate with your lender on the progress and intended delivery date.  

One final thought. In my many years of ag lending,  I have seen all types of lenders. I’ve also seen how lender -borrower relationships can be developed  or destroyed.  Lenders who appreciate the customer relationship over their need to get a transaction done and the borrower who values the relationship with their lender as a business partner is the right and trusted way to get business done.