I have had a few farmers reach out to me recently telling me they would either like to try to simplify their debt situation or move a portion or all of their debt relationship. The question is usually phrased as “I know it’s too late for this year, but when should I start looking at restructuring for next year?” The answer is NOW.
It is never not the time to think through your debt situation. The best time to do it is when it is hot on your brain. If it meant enough to you to take the time to reach out to me, so it is clearly something that is important to you at the moment. So while it is important and hot on your brain start doing some research.
If you are looking to just restructure our debt and not necessarily want to move your business, start with your banker. They should be done with the daunting renewal season now and should have the time to walk you through some things. Then ask others around you about their structures. I know you may think – “I am NOT asking someone about their debt!” Well that is fine with me because that isn’t what I was asking you to do anyways…. I want you to ask about their STRUCTURES. Do they have a balloon? Long term fixed rate? 10, 15, 20 year amortization? Just ask what structures they have in place. I find that folks are alot more willing to discuss the good deals they ave structured more so than the bad. They may not tell you they are $X in debt, nor do I want you to ask them a $ amount. But I bet if you ask – “Hey, I’ve been talking to the banker about some options on my RE loan. Have you done anything with yours lately? Got any good rates?” If they got a good deal recently they will tell you about it. Then use that information to compare and possibly come up with new ideas for your own debt situation.
If you know you would like to move your banking business, then start looking at banks around you. Call around and ask questions. Once again go to your peers and ask who they use or recommend. Yes, it may be harder to close a full deal if your assets are cross collateralized on your LOC this time of year, but it is not impossible to move now. Or even if you don’t want to go through the whole process now so soon after renewing this past spring, you can go ahead and establish a relationship with the banker you would like to move to. You can possibly move a portion of your business now or just go ahead and send over all your information and needs to the prospective banker so they are familiar with you. They can also go ahead and tell you how they can structure you differently from your current bank and let you have ideas to think about during this year for next year.
Your debt is a year round deal. Don’t just think about it when it’s crunch time and everyone is running in for their renewal all at once. If you know you want to make a change start planning now, research your options, analyze your options, then when it’s best for you (now or next renewal season) you will be ready and be first in line at the bankers door to get a deal done.
I hope this is helpful. Of course you can hire someone like me to do these things for you BUT you don’t have to have me to get all of this done. I’m happy to help in any way that I can and of course like to have clients, but I always like to share my thought process so hopefully everyone can take this information and find a good starting point to make a change. You can reach me through the contact tab with questions.