Lenders asking lots of questions about ag loans this year

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When commodity prices are high and incomes are up, farmers often can borrow money to plant their spring crop or make improvements to their dairy with almost no questions asked by lenders. That is not the case this year, says a Purdue University agricultural economist.

As farmers approach lenders about renewing their operating line of credit they should be prepared to answer questions about their profitability, managing risk and working capital, notes Michael Boehlje.

"This year a lot of lenders are increasingly concerned about risk because of the financial challenges they face from regulators and loan review committees,” he adds So, most farmers should anticipate providing their lenders with concrete, definitive answers to loan-related questions. Part of your job as a farmer is to sell your credit worthiness.

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Source: Purdue University

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