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Opinion: Bankers are not the enemy of farmers

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Being a successful farmer in the 21st century requires more than desire and knowledge. Modern farmers must adapt to changing markets, consumer demand, rapidly advancing technology, and new financial rules and regulations.

While most farmers have a passion for their chosen profession, this alone will not make them successful. Failure to adapt can quickly turn their dreams into nightmares. The farmer’s relationship with a banker is something that must be mutually beneficial and pleasurable, if the farmer is to have both present and future success.

It is a rare farmer that does not need or does not seek financial assistance from a bank or one of the many farm lending institutions. Most successful farmers will tell you their relationship with their lender is at least as important or perhaps more so than any other aspect of their business.

Considering the significance, it is surprising that many farmers rank their relationship with their lender as more stressful than many of their other activities. This relationship does not have to be stressful and a meeting with your banker doesn’t have to resemble a trip to the dentist. Here are a few tips that might make the agriculture borrowers trip to the bank more productive and stress free.

Appointments and preparation
Most bankers by nature and training are deliberate and thorough when making credit decisions. Consequently, it is difficult for the lender to make a commitment if you drop in unannounced and request a new million-dollar loan.

Good bankers want to help and to answer your questions.

Call your banker before coming to the bank, and let them know the reason for your visit. Determine a specific loan amount for a stated purpose and communicate this to the banker. This will let the lender prepare for your meeting and will enable them to communicate what material or records you need to bring.

That way, you come prepared, too. Good preparation will often eliminate unnecessary and time-consuming trips to the bank.

Record keeping
Misunderstandings are often the result of bankers not being able to decipher borrower records. Typically, banks will request the customer’s last three tax returns, a current financial statement, livestock, equipment and crop inventories, production records, income and expense projections, and any other information needed for the type of loan requested.

Good bankers have a desire to provide their customers with prompt responses. Clear and detailed information will help speed up the bank’s decision.

While many factors are considered when determining whether a loan will be approved, thorough and legible records will help the bank focus on three questions:

1. Is there adequate collateral to secure the loan?

2. Does the borrower generate sufficient cash flow (income) to service the proposed debt and all other obligations?

3. Does the borrower have a good pay history (credit score)?

Banks want loans
Banks are in business to make loans and, contrary to popular belief, bankers enjoy helping people and businesses. Good banks have a vested interest in the communities they serve and want to see their friends and neighbors achieve their goals and live their dreams. Banks, of course, also have a responsibility to their depositors and must strictly adhere to all governmental regulations.

In addition, bankers have a duty to explain to borrowers the reasons for the bank’s decision and to not put their customers in dangerous financial positions. There are always going to be some loan requests the bank will not be able to grant, and good bankers will explain why.

Bankers also should be forthcoming with what steps the borrower can take to make their request more acceptable. Remember, the bank wants to make the loan and will only deny requests that don’t meet their policy requirements or that don’t comply with governmental regulations.

If farmers will keep an open mind and remember these suggestions, the meetings with their banker will be something to look forward to. Banks can only be as successful as their customers.

Working together helps farmers be more profitable and being profitable is a lot more fun.

Steve Henderson is a lender at the Bolivar branch of OakStar Bank. He can be reached at


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