Turn Planned Debt into a Tool – Not a Burden
Some years are good. Prices are strong, yields are high, and everything clicks. Then there are years when nothing goes your way: droughts, markets, equipment breakdowns. It’s part of the job, but it never gets easier.
Even though farm income is projected to rise in 2025, certain sectors are still feeling the pinch. Commodity sales might dip, and even with government assistance, some operations will feel financial strain.
The good news? Debt isn’t just something you fall back on when things go sideways. If you plan it right, financing can help you stay steady, cover critical needs, and keep your farm moving forward.
“Farm debt can cause uneasiness; but it’s an awesome tool, especially when structured correctly. If its planned insightfully, debt can be one of the most useful instruments for the producer,” comments Conterra Great Plains Relationship Manager Luke Schultz.
Bridging the Gap When Cash Flow’s Tight
When prices drop or yields come up short, cash flow gets squeezed, but your expenses don’t go anywhere. You still have to pay for fuel, fertilizer, payroll, and upkeep. That’s where an operating loan or credit line can be a lifeline.
Short-term financing lets you cover those costs without draining your reserves. Some lenders even offer flexible repayment schedules built around planting and harvest, so you’re not stuck making big payments during lean months.
“The vast majority of our clients come to us with a strategic plan and combined with Conterra’s seasoned staff and market driven products, a good outcome is obtained” continued Schultz. “It’s mature thinking, not knee-jerk reactions, that win out”
And if you’re going through a rough patch, interest-only periods can offer some breathing room. The key is to borrow what you actually need, and make sure you have a plan to pay debt off when the time comes.
Covering Input Costs Before Prices Spike
Prices for things like seed, fertilizer, and feed can swing hard during volatile seasons. Sometimes the smartest move is to lock in pricing early, but that means having cash on hand when you might not have it.
That’s where short-term credit helps. You can take advantage of lower bulk pricing or forward contracts before input costs climb, and avoid paying more when your cash flow is tightest.
“The best producers start planning for planting while in the combine,” Schultz explains. “Ample operating credit gives you that flexibility when the current crop is still in the field.”
If you’re combining financing with smart buying strategies, you’re staying ahead of the curve, not reacting to it. That’s one way to stay profitable when markets turn on you.
When You Can’t Put Off Repairs Any Longer
We’ve all been tempted to stretch a season or two out of older equipment. But when something critical breaks down at the wrong time, it can cost you far more than the repair itself.
“Scanning your annual repair and maintenance bills and then comparing them to a new payment on iron is a good exercise. Which is less? What can I afford to pay versus what can I afford to lose? Time is always money!”
Financing a repair or replacement lets you spread out that cost and keep your operation moving. Just make sure the numbers add up and assess the return on investment (ROI). Is the new machine going to save you time, labor, or help boost yield? If yes, financing might not be a risk, it could be a smart investment.
Freeing Up Cash with Better Loan Terms
If you’re already carrying some debt, refinancing might be a way to loosen the pressure. A lower interest rate or longer repayment term could free up monthly cash, giving you more flexibility to cover essentials.
Let’s say you’ve got a $500,000 loan. Dropping your rate from 7% to 5.5% could save you over $7,500 a year in interest alone. That’s money you can put toward inputs, repairs, or even savings for next season.
“Sometimes, freeing up even just a few thousand dollars a month can take a lot of pressure off, especially in a tight year. It’s worth exploring even if you’re not in a bind,” Schultz notes.
Talk to your lender, even small changes can have a big impact.
Borrowing Without Digging a Hole
Here’s the bottom line: farm debt can help, but it can also hurt if it’s not managed right. Don’t wait until things are dire. Build borrowing into your broader financial strategy, not as a last-minute fix.
Take stock of your cash flow, debt load, and ability to repay. A general rule of thumb? Keep total debt under 40% of your annual farm revenue. If you’re stretched too thin, it becomes harder to adapt when prices swing or weather hits.
“We’re here to help our clients find financing that actually works for their operation, not only now but five and ten years down the line. It’s a partnership and we are in it for both sides to succeed,”
A good lender will make sure any financing actually works for your operation, not just today, but for years down the road.
When’s the Right Time to Reach Out to a Lender?
One of the biggest misconceptions about financing is that it’s only for emergencies. The truth is the best time to talk with your lender is before you actually need the money.
When you’re planning ahead, whether it’s for next season’s inputs, an expansion, or just improving your cash flow, lenders have more flexibility to help you find the right solution. You may qualify for better rates, more favorable terms, and you won’t feel rushed into a decision.
“I always tell my clients: don’t wait until you’re under pressure to reach out,” concluded Schultz. “The earlier we’re part of the conversation, the more options we can put on the table. And the better we can plan around your operation’s timing.”
Even if you’re not ready to borrow yet, establishing a relationship with your lender means you’ve got someone in your corner when you do need to move quickly. That can make the difference when a good opportunity comes up, or when the unexpected hits.
Thinking Ahead, Not Just Getting By
Tough seasons are part of the deal in farming. But they don’t have to knock you off course. When you use financing strategically, whether it’s seasonal credit, refinancing, or expanding your operation, you’re setting your farm up for stability and growth. If you’re thinking about your options or dealing with a financial squeeze, now’s a good time to talk it through. Our team at Conterra is here to help you find a smart path forward — one that fits your operation, your timing, and your goals
Want to talk it through? No pressure, just perspective.
Conterra Ag Capital is a private lender, focused exclusively on agriculture. Conterra regional relationship managers, including are available to answer your questions regarding the variety of agricultural loans available. Find your Conterra relationship manager here: Find an Ag Lender – Conterra Ag Capital
Luke Schultz is a Kansas-based Relationship Manager with over 20 years in ag finance and a lifetime rooted in agriculture. Raised in the Great Plains and still working alongside its producers today, Luke brings a practical, creative approach to financing—and a perspective shaped by the land itself.
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.
