Finding A Farm Loan

Securing financing for the farm can take some legwork. If your banker turns you down for a farm loan, it may not be because of your financial position. It could be because of theirs. Every bank’s financial position changes on a monthly basis. Maybe they had to write off some commercial loans or they just don’t have the capital right now. However, the bank is not going to tell you that because they don’t want the public to know they’re low on money.

Shawn Williamson is a CPA with the Fick, Eggemeyer, and Williamson firm in St. Louis, Missouri. He says if your bank tells you no, don’t give up.

"You need to approach three or four banks at least, because of this issue of that bank might not have any money to loan right now or might not be excited about a farm loan or a commercial loan right now," says Williamson. "And, there can be a competitive component here. My banker says 5.5%, this other banker says 5%, and this other banker says 4.75%."

You chance of being approved for a farm loan increases if you come in with all your ducks in a row.

"Having all of your tax returns done by a CPA or someone skilled. They go over the returns with a fine-toothed comb, making sure that you’re credit-worthy. Your credit rating of course, they’re going to check that out, make sure that you’re never late with payments to anybody. And, I guess also just having a clear plan," he says. "You need X-amount of dollars and you know exactly why you need it."

Williamson says if multiple banks turn you down for a loan, you probably shouldn’t be looking for one.