AgriVision Podcast Episode 9 – It’s time to talk to your ag lender

Katie Wantoch
This is UW Extension’s Farm Management Agrivision Podcast. I am Katie Wantoch, Agriculture Agent with UW-Madison Division of Extension. I will be chatting with fellow Extension Educators as we answer questions from farmers and share our knowledge and expertise and how you can improve your farm management skills.

Jenny Vanderlin
Hello, this is Jenny Vanderlin, Associate Director from the Center for Dairy Profitability UW-Madison Division of Extension with AgriVision podcast host Katie Wantoch, Agriculture Agent from Dunn County. Hello, Katie.

Katie Wantoch
Hi, Jenny. Thanks for helping with our podcast today.

Jenny Vanderlin
You’re very welcome, Katie. It’s my pleasure to do this. Today’s question is from a farmer who along with his wife own a 275 acre farm and milk 100 cows in Central Wisconsin. They are in their late 40s. They owe $280,000 on their farm and $45,000 on a new tractor that they bought about three years ago. One of the things that the farmer has been reading about is that they should be working with their lender about having interest only loans this year to help them get through the coronavirus crisis. He is concerned about talking to his loan officer because in the past five years, they’ve been paying the interest only for more years and they’ve been paying the interest and principal. The farmers wondering if you think the lender will want them to pay interest only this year. He is also concerned that the banker may say they should sell out because they are not making much progress and paying off loans. Finally do you think that they should refinance their loans because of lower interest rates? Or are there any other loan programs that can help this time around?

Katie Wantoch
Yeah, those are some some tough questions that the farmer is certainly asking us. So the Coronavirus disease also known as COVID-19 continues to impact communities across the country, broader economy and certainly impacts farmers and the lenders who loaned money to them. You know, deals are being done despite infrastructure disruptions, such as email and signing of paperwork digitally. Here’s maybe some advice to consider when communicating with your lender, especially during this time of COVID. For many farmers, and this one in particular, with loans and mortgages there is help but first I would suggest they assess their situation. If they can pay their loan or mortgage continue making payments. Don’t call the lender if you aren’t facing an immediate issue. Lenders are getting lots of calls and need to help those who aren’t able to pay their mortgage or their loan. You can’t pay your loan or mortgage or you could only pay a portion you know, certainly contact your lender immediately. Check the lenders website for possible options and it may take a while to reach out to them so maybe look at email instead of a phone call, but be proactive during this crisis. The lender may not know that you or your business is struggling to make payments. Many financial institutions are working with borrowers who may not be able to meet their payments because of the effects of COVID-19 and be prepared when you do communicate. Financial information should be current within 90 days for a balance sheet, income statement or a recent tax return, your production records, personal debt if those are not listed on the balance sheet, and other potential sources of income. And be sure to maintain your integrity, inaccurate information or failure to honor your commitments will jeopardize your relationship as well as harm your credit ratings. If you need help working with your lender or understanding your options, you may want to reach out to a professional. Seek advice from credit counselors, lawyers, accountants, Wisconsin’s Farm Center or other trusted agriculture professionals. Ultimately, the decision to accept or reject the lenders proposal to assist you with payments is your decision as the borrower.

For more Extension AgriVision podcasts or resources to improve your farm management skills check out farms.extension.wisc.edu. Thanks for listening.