We have all heard a million times, you only get one chance to make a first impression. This saying is here to stay and is highly applicable to your first meeting with your new potential AG Banker. Bankers always say they don’t want customers who will try to “bank them”. Meaning they don’t want customers with a long string of demands, that only wants to hear if their way can be done, and never has time to listen to the alternatives the bank has to offer. Also, bankers want to know they are lending money to informed and competent operational managers. They want the farmer to be aware of all aspects of how the farm runs as well as how much money it takes to run the farm.
The banker wants you as a new customer.
I promise the banker wants you as a new customer, and they want to like you and establish a long and productive relationship. However; they would be more willing to work with your requests and possibly “put some pep in their step” about approving and processing your loan if you keep the following items in mind.
Know how much money you need to operate! If you are projected to spend $200,000 don’t go in and demand $220,000. Don’t take the low road either, if you ask for too little and have to keep coming back asking for more you don’t appear to be a competent manager.
Bring everything you think they will ask for and then some. Have your tax returns (3 years if possible), a current and accurate financial statement prepared (that has been signed and dated), have your yield history (3 years of each crop if possible), your results/actuals from the prior year (income and expense), and your planned acres for the upcoming year. It is also helpful to bring copies of contracts you already have for your crops. If you bring everything the first time, that means they will not be constantly calling you for more information and can actually get your loan done!
Be honest. If one of the loans on your financial statement is a shortage/carryover from a prior year go ahead and say that. Explain why the shortage happened and how long ago it was. This is not uncommon amongst farmers; just put it all out there. Similarly, if you know there will be some negative items on your credit report just go ahead and explain how and why they are there. The banker will respect your honesty.
Listen to the options they give you. Don’t try to “bank them”. If you come in with an idea of only one way that the deal can go you may miss out on a better deal. Let them tell you the options and the implications and benefits of each.
Lastly, be prepared to answer questions and ask questions. If you are a new customer they have to get to know you and your operation. They will ask you questions about your financials, and finances can be a sticky subject at times. If you want to work with this bank though, you have to answer the questions and provide the necessary information. Similarly, feel free to ask the bankers questions! Ask them about rates, fees, structures, and all their other services. You should get to know your banker as your banker gets to know you. As a business owner a knowledgeable and trusted banker is someone you need on your team.