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What does the banker want?

Three areas of focus to improve your lender relationship.

Our advisors are often asked what bankers are looking for in a farmer client or a new prospective client. I believe that lenders today are looking for a number of things in a farm leader. As that leader, it’s helpful to be aware of those areas.

While in the past farm lenders may have done business through a handshake deal or by focusing on aspects such as a farmer’s character or reputation in the community, it’s a whole new ballgame today.

Of course, factors like your business reputation and your character ultimately always matter when it comes to running a business well. But there are additional skills and behaviors that today’s ag lenders are seeking in clients and potential clients – and you’ll want to commit to learning them whether you love your current banking relationship or you’re actively seeking a new one.

Build financial focus
These facets are not only important in your banker’s eyes, they’re great for your farm business overall. Paying attention to the details in these areas can score you big points with the banker, but even more as you lead your farm business.

Here are three aspects I see as important to bankers – and to your business. Consider rating yourself on how you’re currently doing in each one.

  1. Business savvy and financial know-how. Bankers want to know that you have a certain level of financial understanding as you run your business. You need to be able to have a conversation with them about your farm’s financials, using the types of terms and concepts that they use. Commit to learning more and understanding how to converse with your banker at that level. When you ‘speak the language’ with them, they may gain more confidence in your ability to run a successful farm business.
  2. Engaging in forward-looking planning. Lenders are looking for farmers who are actively envisioning what’s next for their farm business. They want the farm leader to bring plans detailing exactly what the leader is going to do to make the farm successful. And then it’s important to make sure you use those plans to actually help guide the future. Your strategy doesn’t have to be set in stone, but it helps build the banker’s confidence and allows them to see the types of actions you’re going to take to reach your goals that year – and into the future you envision.
  3. Knowing and using your numbers. When it comes to decision-making on the farm, lenders want to work with farmers who actively use their farm’s key numbers. They want to know that the decisions you’re making – whether a major purchase or other big decision – are based on solid data, not emotion, using your operation’s detailed financial analysis. Show your banker – or a potential lender – that you know your farm’s numbers and use up-to-date financials as you make decisions. This can really demonstrate to them your competency and your dedication to leading your business well.

How do you think you are currently doing in each of these areas? Where could you take action to further your abilities? Wouldn’t it be great to impress your banker with your financial intelligence? Work with an ag finance advisor to get the data and plans in place to run your farm by the numbers.

Read the current issue of the Smart Series publication, bringing business ideas for today’s farm leader. This issue includes perspectives on what to do when a landlord asks for higher rent, how to find the right new employee, a farm business checklist for the spring season, and more. Get your free online issue here.

The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.

Frye is president and CEO of Water Street Solutions. Email questions to All questions and responses will be printed or published online as anonymous

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