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Corn+Soybean Digest

A Look Behind the Lender’s Desk

This winter it will not be business as usual. Here is what you can expect from the other side of the desk from your ag lender:

  • Lenders will require more and better documentation of your information and will closely monitor your performance after the loan is made. You can expect to provide monthly and quarterly financial reports to your lenders, with an explanation of any discrepancies between projected to actual results, both positive and negative.
  • Expect more emphasis placed on repayment ability, capacity and liquidity. Lenders will expect accrual-adjusted statements rather than tax records. They will expect that you use these in strategic and day-to-day decision-making.
  • Staying current on loan payments may not be enough, particularly if you sell capital assets, use accounts payable or defer replacement of capital assets as a strategy. In the long run this will put you out of business.
  • You may be too big to finance as lending limits, capital needs and portfolio concentrations are examined by the regulators and oversight agencies.
  • Expect higher down payments and lower advance rates.

One could sum this up by saying that this is the new normal in agriculture.

Editor’s note: Dave Kohl, Corn & 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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