Many lenders who have crossed over from commercial lending to agricultural lending comment that the agriculture sector has “one up.” These former commercial lenders say that agricultural borrowers have better character. However, if one reads the recent agricultural news, fraudulent activities are on the rise.

Fraudulent activities

Missing cattle, grain not in the bin, and misrepresenting claims of products sold are just a few of the fraudulent activities mentioned. In the non-agricultural sector, fraudulent activities related to cryptocurrency are becoming more common. Professional athletes along with stars on popular financial television shows have committed fraud related to cryptocurrency, revealing unsavory character elements.

Whether it is borrowing money or dealing with landlords, customer character assessments are a critical element of business dealings. Of course, economic good times and periods of economic stress can quickly change the character element. To those of us who have been in business over many economic and weather cycles, the test of character will often come in many formats. You could be asked to provide more land as collateral to shore up financial risk.

The deadly "d's"

In other cases, it may be a cash call for financial liquidity. In either case, a demonstrated willingness to back your business or financial operations in adversity shows strong character. In lending, character is often defined as the borrower's willingness and determination to repay loans regardless of unforeseen adversities. Character includes honesty, integrity, openness, and acting in good faith as well as self-discipline. Of course, family and personal issues including the deadly D’s (death, disease, disability, and divorce) are becoming more notable and are often the adverse type of events that can change the character equation. The deadly D’s can impact the performance of the business and the ability to make payments on time.

Character assessments

Character is often assessed by others, including family members, employees, customers, and other people you associate with. This is why building strong business alliances and relationships is becoming more important in character assessments to enhance and elevate the business and personal qualities.

Character is a particularly important quality for young farmers and ranchers that often lack collateral and experience in business dealings. This is where you must demonstrate the qualities and instincts to follow through on commitments. In other words, walking the talk rather than just talking the talk. Going the extra mile, realizing there are no roadblocks in the extra mile because it is not traveled by many others, can be a sign of commitment.

In the financial component, paying bills and loans on time, having a plan B if problems arise, and communicating are all positive signs of good character. In closing, there is an old saying that your net worth and your self-worth is directly correlated with the people you engage with. Character counts both in the net worth and in the self-worth of life.