In an era in which agricultural markets can turn on a dime, securing reliable and affordable financing has become a critical challenge that can determine the success or failure of a farming operation.
Access to capital is the cornerstone of a thriving farm, whether producers are looking to maintain cash flow, upgrade equipment or plan an expansion.
However, securing that capital goes beyond presenting a set of financial statements and hoping for the best. Lenders are no longer satisfied with just numbers — they want to understand the vision and strategy that guide your farm.
They need to see the complete picture: where your farm stands today, the journey that brought you here and the direction in which you are heading. This is where you can take control of your financing by telling your farm’s story in a way that resonates with lenders and stakeholders alike.
While showcasing profitability remains important, it is equally crucial to demonstrate a deep understanding of your business and your ability to navigate the challenges of the agricultural landscape.
Lenders are interested in the narrative behind the numbers — the strategies, management practices and vision that drive your farm forward. These often-intangible elements, while difficult to quantify, can significantly influence your business’s success and shape your lender’s perception of it.
Moreover, it is important to remember that your lender is not making decisions in isolation. They work within a team — often including risk managers, analysts and decision-makers — who all need to understand your business to approve financing.
The clearer and more compelling your story, the better equipped your lender will be to advocate for your needs within their organization. By providing a cohesive narrative, you help your lender communicate the value and viability of your farm to their internal team (as well as your own), ensuring your business is accurately represented and understood.
Financial statements are only part of the equation. In today’s lending environment, where relationships and trust are paramount, farm managers must go beyond the numbers to ensure their story is fully appreciated.
To craft a compelling narrative that complements your financial statements, start by reflecting on your farm’s journey. Where did you begin, and how have you grown? What challenges have you faced, and what lessons have you learned?
This exercise is not about nostalgia; it is about demonstrating resilience, adaptability and foresight — qualities that any lender values in a borrower.
For example, how has your farm weathered market disruptions, adapted to new regulations or seized unexpected opportunities? These stories illustrate that you are not just reacting to challenges but are proactively managing your farm’s success.
Equally important is highlighting your management structure. Who are the key players in your operation? What roles do they play, and how do they contribute to the farm’s overall performance?
Clearly outlining your expectations, goals and vision for the farm will not only inform your decisions but also demonstrate your business acumen to lenders. This context adds depth to the narrative of your business’s future and how you plan to achieve it.
While quantitative data is crucial, qualitative factors can be equally powerful in shaping a lender’s perception of your farm. These include your management practices, business vision and commitment to sustainability or community involvement.
Being proactive with your farm’s story not only prepares you for potential changes in your lender’s staffing or risk appetite but also demonstrates your leadership through uncertain times.
Lenders want assurance that you are thinking beyond the next season to the next generation. What is your long-term vision for the farm? How do you plan to ensure its sustainability — socially, environmentally and economically?
Sharing your thoughts on contingencies if plans do not proceed well can comfort a lender who may be concerned about the degree of risk you are managing and improve their understanding of your awareness and capacity for risk. Offering these qualitative insights can set your application apart and reveal new opportunities for growth and investment.
Presenting your farm’s financial performance, supported by a well-drafted management structure and business vision, assures lenders of your farm’s long-term viability. Together, these elements create a cohesive narrative that not only supports but enhances your financial statements, making your business easier to assess and more attractive to lenders.
Your goal should be more than just securing a loan; it should be to build a relationship with your lender based on trust and mutual understanding. By taking control of the narrative, you reduce assumptions, mitigate risks and clearly communicate your management strategies.
This approach not only helps secure your current credit needs but also positions your farm as a strong candidate for future opportunities.
Remember, your farm has more to offer than just financial statements. Its story — its challenges, triumphs and aspirations — can be your most valuable asset. By presenting both the quantitative and qualitative aspects of your business, you can confidently highlight your farm’s success and its future potential.
So, the next time you sit down with your lender, do not just hand over the numbers — seize the opportunity to tell your farm’s story and take control of your financial future.
Blake Copley is a farm management consultant with Backswath Management Inc. He can be reached at 825-712-7684 or .
