Preparing a successful farm loan application can be a daunting task for borrowers. However, a well-prepared loan application is important when securing financing for your farm or ranch operation. It’s important to understand how to prepare for a successful loan application, including what information is required, and what factors lenders consider when analyzing loan applications.
1. Gather All Necessary Documents
Before you begin the loan application process, you’ll need to gather all of the necessary documentation. This may include financial statements, tax returns, a business summary, entity documents, family living expenses and other supporting materials. Be sure to provide up-to-date and accurate information, as this will help lenders evaluate your application more quickly and efficiently.
“When applying for a farm loan, it’s important to have all of your documentation organized and submitted as soon as possible to help move the process along,” advises Sarah Streeter, Conterra senior closing administrator.
2. Prepare a Clear and Concise Description of Your Operation
A clear and concise description and history of your operation is a critical component of a successful loan application. Your description should outline your goals, strategies, and financial projections for your operation. Be sure to include detailed information such as the size of your farm, the types of crops or livestock you raise, and your marketing and distribution strategies.
3. Organize Your Application Materials for Clarity and an Easy Review
When preparing your loan application information, it’s important to structure it in a way that is clear and easy for lenders to review. This may include organizing your documents into sections, using headings and bullet points, and providing a summary or executive summary at the beginning of your operational description.
4. Be Prepared to Discuss Your Operation and Financing Needs
When evaluating loan applications, ag lenders will consider a variety of factors, including your credit score, collateral, and ability to repay the loan. However, they will also want to discuss your agricultural operation and your financing needs. Be prepared to discuss your operation in detail, including your current financial situation, your plans for expansion or growth, and any challenges or opportunities you anticipate.
It is important to be upfront regarding difficulties or hiccups in your operation, lenders value honesty when disclosing adverse items. When reviewing your ag loan application, your lender will pull recent credit reports. Remember, any unrevealed information will be discovered during your lender’s due diligence searches, so it is best to be forthcoming with all information relevant to your credit history.
5. Seek Guidance and Support from your Agricultural Lender
Finally, it’s important to seek guidance and support from your agricultural lender throughout the loan process. Your ag lender can provide valuable insights into the application process, offer advice on how to structure your information, and help you identify the financing options that best meet your needs. It is critical to have forthcoming and honest conversations with your ag lender when seeking recommendations on lending programs.
By gathering all necessary documentation, preparing a clear and concise description of your operation, structuring your materials for clarity and ease of review, being prepared to openly discuss your operation and financing needs, and seeking guidance and support from your ag lender, you can assist in making the application process as smooth as possible.
Conterra Ag Capital focuses exclusively on agriculture, providing traditional farm and ranch loans, development and alternative lending to America’s farmers, ranchers and agribusiness. With regional relationship managers across the country, Conterra has years of experience and flexible ag loan options available to meet the needs of producers.
Disclaimer: Please note that the information provided in this article is for educational and informational purposes only, and should not be construed as financial or investment advice. While we have made every effort to ensure the accuracy and reliability of the information presented, Conterra Ag Capital and its affiliates make no representation or warranty as to the completeness, correctness, timeliness, suitability, or validity of any information contained in this article. You should always consult a qualified financial advisor, tax professional, or other qualified professional for advice on your specific financial situation.