With this year’s drawn-out and stressful planting season in the books, now is a good time to assess your financial position. How are your managing your debt load?
“It is never not the time to think through your debt situation,” says Ashley Arrington, of AgriAuthority. “Your debt is a year-round deal. Don’t just think about it when it’s crunch time and everyone is running in for their renewal all at once.”
If you think you might want to make a change around your debt structure, start planning now, says Arrington, also a 10-year veteran of ag banking. She recommends starting with two key questions.
Should you restructure your debt?
Start by scheduling a meeting with your banker to discuss options, Arrington suggests. See if they offer any other debt structures that may be a smart option for your operation.
“Do they have a balloon? Long term fixed rate? Or a 10-, 15-, 20-year amortization? Just ask what structures they have in place,” she says.
Also, ask your farming peers about what options they are using. “Then use that information to compare and possibly come up with new ideas for your own debt situation,” she says.
Should you move your banking business?
Start by looking at banks around you, Arrington suggests. Also ask your peers on who they use or recommend.
“Yes, it may be harder to close a full deal if your assets are cross collateralized on your line of credit this time of year, but it is not impossible,” she says. “Or even if you don’t want to go through the whole process now, you can go ahead and establish a relationship with the banker you would like to move to.”
You can provide your operation’s information to a prospective banker to determine their structure, she says, which you can compare to your current lender. “That lets you have ideas to think about during this year for next year.”
Overall, Arrington encourages, don’t delay in learning your options.
“Research and analyze your options, then when it’s best for you (now or next renewal season) you will be ready and be first in line at the banker’s door to get a deal done,” she says.