Financial Reporting to Lower Farm Borrowing Costs

Financial Reporting to Lower Farm Borrowing Costs

Financial Reporting to Lower Farm Borrowing Costs

According to the Federal Reserve Bank of Kansas City, agricultural lending has slowed as interest rates on farm loans have increased considerably. Looking at the chart below, it is particularly interesting as it details the large spread in interest rates between preferred low-risk borrowers and those at the other end of the spectrum who are historically higher risk borrowers.

Using farm accounting software to calculate your cost of production and projected profit margins is the best option when working with your lender. Once you have those numbers and the tools to easily share it effectively, it can catapult you to that upper 10 percentile. When you crunch the numbers, the 3% spread between the 10th and 90th percentile is a $30,000 savings on every million dollars borrowed now that’s real money! 

 

Having good financial tracking and reporting (with Traction Ag) will better position your farm in every way. Borrowing money is never easy, but you can definitely reduce the steps and make the process easier. You will likely be rewarded for your efforts!

  • Hinnerk Wolters
    Hinnerk Wolters is VP of Agriculture of Hageman Group, where he leads Ag Operations and is responsible for sourcing and developing new and entrepreneurial operations in Agriculture. Hinnerk is also a farmland broker and business lead with Hageman Realty and Farm Management. Prior to joining Hageman, Hinnerk worked with his family’s farming operation and then managed seed farm and plant operations at Trelay Seeds and Biddick, Inc. in southwest Wisconsin. Hinnerk graduated from Purdue University with a B.S. in Agricultural Economics, and an M.S. in Food and Agribusiness Management. He also holds an MBA from Indiana University.

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