Spring planting is one of the most capital-intensive times of the year. The costs of seed, fertilizer, equipment, and operating expenses add up quickly, which means many financial decisions have to be made in a short window.
That’s why winter is the ideal time for farmers and ranchers to review their finances. Making loan adjustments, refinancing decisions, or long-term plans now allows those choices to be made before spring planting expenses begin.
FOUR PRACTICAL WAYS TO STRENGTHEN YOUR OPERATION’S FINANCIAL HEALTH BEFORE SPRING PLANTING
IT’S WORTH TAKING A CLOSER LOOK AT HOW YOUR EXISTING LOANS ARE STRUCTURED AND WHETHER THEY STILL ALIGN WITH HOW YOUR OPERATION FUNCTIONS TODAY.
CONSIDER REVIEWING THE FOLLOWING OPTIONS:
01
INTEREST RATE TYPE
Fixed rates provide payment consistency over time, while variable rates may change as market conditions shift. Understanding what you have and why helps you evaluate risk and predict cash flow.
02
LOAN TERM AND AMORTIZATION
Longer terms can reduce annual payments and improve short-term cash flow, while shorter terms may build equity faster. The right balance depends on your operation’s goals and capacity.
03
DEBT ALIGNMENT
Loans structured years ago may no longer reflect your current acreage, production levels, or operational focus. As your operation evolves, your financing may need to grow with it.
If payments feel tight during certain times of the year, or if managing multiple loans has become more complicated, restructuring debt can help make payments more manageable year-round.
MANY PRODUCERS THINK ABOUT REFINANCING WHEN INTEREST RATES DROP, BUT RATES ARE ONLY ONE PART OF THE EQUATION.
PRODUCERS ALSO CONSIDER REFINANCING TO:
- Improve cash flow ahead of planting season
- Consolidate multiple loans into a simpler structure
- Adjust loan terms to better match current production levels
- Prepare for expansion or long-term improvements
Timing is also crucial to consider. Refinancing before spring planting allows you to make changes before operating expenses increase.
IF YOU’RE SERIOUSLY CONSIDERING REFINANCING, ASK YOUR LENDER THESE KEY QUESTIONS:
Should I refinance my farm loan before spring planting?
How could refinancing affect my operating capital this season?
Is refinancing only useful during challenging financial years?
BEFORE MAKING THOSE DECISIONS, IT’S IMPORTANT TO UNDERSTAND HOW COLLATERAL AND EQUITY FACTOR INTO YOUR FINANCIAL POSITION.
COLLATERAL
Can include land, improvements, or other assets that support a loan.
EQUITY
Reflects the value already built into those assets over time.
UNDERSTANDING YOUR EQUITY POSITION IS ESPECIALLY IMPORTANT BEFORE:
- Purchasing additional land
- Making major equipment upgrades
- Investing in infrastructure or long-term improvements
AG LENDERS EVALUATE COLLATERAL DIFFERENTLY THAN CONVENTIONAL LENDERS, TAKING INTO ACCOUNT
LAND PRODUCTIVITY
LONG-TERM VALUE
OVERALL STRENGTH OF THE OPERATION
IF YOU’RE UNSURE WHERE TO START, GATHERING A FEW FINANCIAL DOCUMENTS AND REVIEWING RECENT STATEMENTS CAN PROVIDE SOME DIRECTION.
USE THESE TOOLS TO CLARIFY SPRING PLANTING NEEDS, ANTICIPATED EXPENSES, AND QUESTIONS WORTH DISCUSSING WITH A LENDER.
Pre-Spring Financial Checklist
Review a current balance sheet showing assets and liabilities
Project cash flow for spring inputs and operating expenses
Confirm operating capital needs
Gather key documents early, including:
Recent tax returns
Financial statements
Lease agreements
Loan summaries
HAVING THIS INFORMATION ORGANIZED AHEAD OF TIME CAN MAKE LENDER CONVERSATIONS MORE PRODUCTIVE SO YOU CAN START MAKING DECISIONS AND PLANS.
Why February Is Ideal For a Lender Check-In
SINCE FEBRUARY IS RIGHT BEFORE PLANTING SEASON, IT’S AN IDEAL TIME TO REVIEW YOUR FINANCES AND SEEK GUIDANCE FROM A LENDER. MEETING WITH YOUR LENDER EARLY LETS YOU DISCUSS OPTIONS AND MAKE DECISIONS WHILE YOU HAVE THE EXTRA TIME, SETTING YOURSELF UP FOR A STRONG SPRING.
Partnering With Plains Land Bank
PLAINS LAND BANK WORKS WITH FARMERS AND RANCHERS TO REVIEW LOAN STRUCTURES, EXPLORE REFINANCING OPTIONS, AND SUPPORT LONG-TERM OPERATIONAL GOALS.
IF SPRING PLANTING IS ON THE HORIZON, NOW IS A GOOD TIME TO START THE CONVERSATION.
TALK WITH A LOCAL AG LENDER BEFORE SPRING PLANTING BEGINS.
