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Corn+Soybean Digest

Are You a Ten?

Well, I have not gone retro on you, having images of Bo Derek who was considered a perfect 10 in the movie. This article is about making yourself marketable to your agrilender and being the best you can be.

Let’s face the facts. The sub-prime lending crisis will ripple into agriculture. Expect more financial documentation and information requests in this winter’s renewal season. Agrilenders will tighten collateral requirements. For example, one major lender in the Midwest has reduced the maximum loan on land from 80% to 60-65% of market value. By the way, in the farm crisis years, this was as low as 50% in the Midwest.

Agrilenders will require higher credit scores above 650. This is the time to check your credit report and obtain your scores. Check your reports for any errors and work with bureaus to make corrections. Seek out advice on how to raise your scores.

Updating financial statements with reasonable land values and other asset values will be another component of becoming a 10. Three years of tax records along with accurate accrual-adjusted income statements taking into account changes in prepayments, inventory, account receivables, account payables and other expenses will become a requirement in making sound management and financial decisions. Personal and family living expenses will be judged along with objective reasonable expansion and adjustments in the business.

Expect more field inspections and strict financial regulations going forward. Some of you are saying, “Why all the hassle?” Pragmatic and proactive agrilenders are attempting to get ahead of the curve in case of a downturn.

Editor’s note: Dave Kohl, The Corn And Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at

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