One of the most critical decisions a business person makes is choosing a lender. Because the agricultural industry depends on the sound use of credit to finance real estate, production assets, and operating activities, a good relationship between borrower and lender is important for business success.
The borrower and lender have similar goals in that they want to ensure the long term viability of their businesses. The borrower and lender should each have high expectations for what the other brings to the relationship.
Here, John Gates with Farm Credit Services in Billings, MT, shares some tips for making that relationship work from both sides. First, from the borrower's side of the relationship, What should you look for when selecting a lender?
1. Choose a lender that has a good understanding of your industry and its people.
2. Look for a lender that has the capacity to meet all of your borrowing needs.
3. Look for a lender with competitive loan products and quality service.
4. Choose a lender that has a stable staff with experienced employees.
5. Look for access to the decision maker.
6. Choose a lender with a long term presence in your industry.
7. Your lender should have up to date knowledge of credit principals and how it pertains to your industry.
8. Select a lender that treats you as more than just a transaction and is interested in a long term relationship.
9. Do business with a lender that values trust, confidentially, and ethics.
10. Look for a lender that can process your requests in a timely manner.
11. Select a lender that communicates rates, terms, and conditions up front in a clear manner.
12. Look for a lender that is willing to share their analysis of your financial information and discuss the trends they see developing.
Now, look at the lenders side of the equation. How can the borrower be a valuable partner in the relationship?
1. As a borrower you should expect to provide your lender with accurate and complete financial information. A good relationship is built on a mutual understanding of the business and it's financial condition.
2. Provide an annual business and marketing plan to your lender.
3. Maintain an honest and ethical relationship with your lender.
4. Perform a personal consumer credit check on a regular basis.
5. Maintain open and regular communication with your lender.
A successful relationship between a borrower and lender requires cooperation and professionalism by both parties. Like a chain, the relationship is only as strong as the weakest link. Gates emphasizes that this list is certainly not all inclusive and each situation will have other requirements, such as the lenders willingness to visit and learn the operation. Bottom line is that the relationship must be beneficial to both parties.