Tips for Talking to Your Banker
Have a plan and financial records when you request credit for your operation.
What are your business plans for 2017? How will you present them to your lender?
Those were questions asked of cattle producers attending an Angus University Workshop conducted during the 2016 Angus Convention hosted Nov. 5-7 in Indianapolis, Ind. Louis McIntire, credit officer with Farm Credit Mid-America, offered information about preparing to talk with a banker.
“Have a plan and go to your banker early to visit about renewing a line of credit. …,” said Louis McIntire, credit officer with Farm Credit Mid-America. “Ask your banker to visit your operation and meet your family. It does make a difference.” To listen to McIntire’s presentation, click the photo above or turn your browser to http://bit.ly/AC16-McIntire-Audio.
McIntire said that despite the trend toward lower farm and ranch income, credit is available. However, when considering applications for operating loans, most lenders are focusing on the applicant’s management capabilities and the quality of their financial data. Lenders will consider liquidity, fixed costs, quality of collateral and the ability of cash flow to service debt obligations. If an operation is financially stressed, a lender will want to know what corrective measures are under way.
“With cattle prices lower, it may be necessary to make changes. Make a written plan and provide a copy to the bank,” said McIntire, suggesting that producers talk with cattle buyers, an accountant and business friends for assistance in developing a plan for production and marketing.
Regarding ways to increase income from cattle sales, McIntire cited the opinions of Jim Akers, whose Bluegrass Stockyards auction facilities market roughly half of all Kentucky cattle, posting annual sales of $600 million. While it can be difficult to sort out value attributes, Bluegrass Stockyards routinely sees 5% to 10% higher prices for Angus-sired calves. Premium prices also may be attributed to calves being already weaned, castrated and preconditioned. Adding “natural” to the value claim also can increase premiums.
McIntire said Akers views the current marketplace, where cattle supplies are higher, as a prime environment for making sure calves represent added value. Premiums can be realized for cattle that meet buyer expectations.
“Have a plan and go to your banker early to visit about renewing a line of credit. Take along an updated balance sheet and tax statement, and provide projections and capital expenditures for the coming year,” added McIntire. “Ask your banker to visit your operation and meet your family. It does make a difference.”
McIntire’s presentation was one of the Angus University Workshops sponsored by Merck Animal Health Nov. 6 at the 2016 Angus Convention. To listen to his presentation or access his PowerPoint, visit http://bit.ly/AC16-McIntire. For comprehensive coverage of the Angus Convention, including speaker summaries, links to the full presentations, photos, videos and more, visit www.angus.media/news/Angus-Convention.
Editor’s Note: Field Editor Troy Smith is a freelance writer and cattleman from Sargent, Neb.