Farming costs can add up quickly, so it’s no surprise that many farmers need financial assistance, either with getting started or keeping their existing operations up and running.
Fortunately, it’s easier than you might think to get an agricultural loan, according to Paul Dietmann, emerging markets specialist for Sun Prairie-based Compeer Financial. He encourages farmers to keep detailed financial records, because those come in handy when it’s time to apply for assistance.
“When a farmer is looking for a loan, the first thing we usually require is a balance sheet, which is a financial statement that shows everything he or she owns and owes,” Dietmann says. “We also gather a prospective borrower’s tax returns, and we combine those with the balance sheet to look at historic cash flow and put together an income statement for the farm.”
Dietmann adds that lenders are looking for a cash flow projection that shows the farmer’s income will be sufficient to cover operating expenses as well as loan payments, while also enabling the borrower to comfortably pay for family living costs.
Though it may be easier for a farmer who already has a working operation to demonstrate his or her profitability, Dietmann says he regularly works with beginning farmers, too.
The key is having a solid plan that shows when cash will come in throughout the year and how it will be used.
One popular option for farmers seeking assistance is the Farm Credit system, which is organized as local, farmer-owned farmer-led cooperatives.
Established in 1916 to help farmers and rural interests, Farm Credit is a nationwide network of 77 customer-owned lending institutions, including Compeer Financial. According to Dietmann, the system ensures farmers have access to reliable credit, and it’s designed to help them succeed.
“Farm Credit is a great option for farmers who are looking for capital,” he says.