Importance of Sharing Financials with Your Ag Lender

October 25, 2021
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While the agriculture business is founded on principles of independence, when it comes to finances it is important to let your lender see the details. Sharing your financials with your agriculture lender is important for building a lasting relationship with the lender. When you are open about your finances, you open the lines of communication, which builds trust, and the lender has an opportunity to become knowledgeable about your business the way you are.

Communication between a borrower and a lender is more than just a single transaction. This is rather an ongoing relationship requiring regular communication. Lenders want to know the details about your finances in order to make the best decisions for you, and the only way to do this is through open communication. 

According to Scott Wegmann, CSB Regional Vice President, “Timely, accurate & detailed financials provide the basis for good decision making for any small business, including our agricultural producers.” Providing your lenders with the information they need is the first step to creating open communication, but both parties will also need to work together in a positive way. 

Once you share your financials with your lender, they will most likely give you feedback. Ultimately, as a business owner, you get to make the decisions for your business. However, keep in mind the lender’s expertise and knowledge. If you create an open dialogue about the feedback, it will benefit both parties.

Building Trust
Every relationship requires trust to be successful, and the lender-borrower relationship is no exception. Sharing your financials with your lender will be the key to unlocking this trust. From there, you will be able to have courageous conversations full of open communication and thoughtful decision-making. Once decisions are made, it will also be important to stick to the decisions. This will help solidify the trust in the relationship for both the lender and the borrower.

Farmer and Bank Manager

Knowledgeable Borrowers & Lenders
In agriculture, business owners are often passionate about their work. They know all the numbers off the top of their head, and they also know all of the processes that go into making those numbers. People in agriculture are knowledgeable. If you share accurate information with your lender, it will prove to him/her not only do you know your business well, but you also want them to know your business. 

Scott Wegmann says, “Providing financials to your lender and reviewing them with them, demonstrates a full understanding of your business and strengthens your management skills in the eyes of your lender.” Knowing the information and being able to share and explain it are different. This is what Wegmann means when he mentions management skills. A business owner might have all their finances in their head, but if their books aren’t up to date, the lender might be wary. Sharing this information not only provides evidence of your knowledge, but it also allows the lender to become knowledgeable. 

Anyone involved with your money needs to be knowledgeable about your business. As Wegmann says, they need timely and accurate information. The lenders want to know about the businesses they are getting into. They need to know the ins and outs of your business in order to provide you with the best possible options. 

If you are ever on the fence about sharing information with a lender, consider asking them questions about the reasoning behind needing the information. They will be able to provide you with honest answers to start the dialogue and get you on the way to building trust between knowledgeable professionals.