Waiting On An Operating Loan? Here’s What You Should Do

“I really think it's a lot of heavy and hard decisions for bankers, trying to ride out tough situations, and it takes a lot of time to make those decisions.” ( Farm Journal )

Farmers throughout the country are frustrated by operating loan delays that are creeping too close to planting time for comfort. What can you do if you’re in this position? Ashley Arrington, of Farmhold Financial, shares these tips to help speed up the process to get the money you need now.


There are two main reasons loans are delayed, according to Arrington. First, weather. Because of the hurricanes in the south and weather issues in the Midwest caused harvest to be late, farmers who are usually early to apply couldn’t finish their financials in a timely manner.


“So now instead of the slow trickle of customers they were used to, lenders had them all at one time,” she says.


The other issue causing the delay is the farm economy. The average net farm income forecast for the next decade is $80 billion, according to USDA. For 2018, net farm income was $66 billion, which compares to a peak of $134 billion in 2013. And as a result, bankers are making tough decisions about some farm loans.


“Back-to-back years of losses combined with a weather event have the powers at be thinking what do we do? Do we foreclose on them, or do we ride it out another year?” she says. “I really think it's a lot of heavy and hard decisions for bankers, trying to ride out tough situations, and it takes a lot of time to make those decisions.”


What To Do About The Delay


  1. Don’t be afraid to follow up with your banker. “The squeaky wheel gets the grease,” Arrington says. Call and ask for a status update. Ask for a timeframe and remind your lender you’re a good customer and you need loan approval. “Don't be afraid to holler so you can get attention,” she says. “I promise the other customers are not afraid to holler.”
  2. Provide more detailed information to your lender. “It’s always an option to provide your banker more information,” she says. “If you're banker is calling to ask questions of you, chances are you may need to tidy it up a little bit.” Providing a narrative, even if you’ve already submitted your financials, can expedite the process. “Provide an easy-to-read snapshot of why you’re showing losses or increased expenses,” she says. “They're going to put all that information in the narrative that’s going to the committee and if they can just copy and paste that, it helps a lot.”
  3. Ask your peers for their advice and alternative solutions. If you’re in an area that experienced a weather setback, you’re not the only one having a problem. “Talk to peers about they’re doing,” she advises. “They may have some ideas that could work for you.”
  4. Talk to vendors. “If your vendors are willing to let you borrow on the inputs you need to get started, go for it,” Arrington says. “Just be sure to notify your banker that you have an open account with whoever it is and that your first draw on your operating line will be used to pay it off.”
  5. Look into alternative financing providers. “There are a lot of companies now that just do crop financing,” she says. “Just because you think it’s not an option, you don’t know unless you ask.”