by Mike Fassel, Relationship Manager at Farm Plus Financial
When applying for a farm loan there are several steps that can be taken to maximize the likelihood of hearing these words: “You have been approved for your Farm Loan!” The farm loan application approval is influenced by several factors including income, assets, debts, credit score, collateral and agricultural property appraisal value. While some of these influences can not be changed in the short term, there are some actions that you can take to influence and improve before or even during the loan process. Let us help you to avoid farm loan application denial.
How to Avoid Farm Loan Application Denial
Each applicants situation is unique to that individual farm operation so there are no magic tricks that can help every application get approved. It is important to realize that the bank is making an investment into your farm operation, so it is crucial to put your best foot forward. While there are many factors that are only able to be influenced by the market or or long term strategic moves by your farm business, here are some of the factors that can be influenced to improve your chances of getting approved for a farm loan.
Credit Report / Credit Score
The first item to consider is your credit report. Prior to having your credit report pulled by your farm lender it is beneficial to pay down credit cards and any other miscellaneous debt as much as possible. Credit card companies typically report the current balance to the credit agencies at the end of the month, so paying your debt down around the 25th of the month prior to the credit pull will result in a potentially improved score along with lower debt obligations that will benefit your debt to income ratio.
Income Tax Planning Strategies
Additionally, income tax planning strategies can be used to maximize the income that can be used for farm credit approval. For example, depreciation is an expense that will be added back to income by many farm lenders. At Farm Plus Financial we are able to add depreciation back to income since it is a non-cash expense. For other tax planning strategies please contact your relationship manager at Farm Plus Financial.
Farm Loan Appraisal
The agricultural appraisal is commonly the final stage of the loan approval process. Selecting the correct appraiser can result in a more accurate property value and possibly a higher property value. Appraisers that are well informed with the current market conditions and recent agricultural property sales in your area do not need to be conservative because they are able to be accurate. Farm Plus Financial works with the top agricultural appraisers across the nation and will provide you with a selection of the best farm property appraisers that will provide an appraisal that will be accepted by the bank, in turn helping you to get approved for your farm loan.
To learn more about agricultural financing opportunities and additional factors to consider when applying for an Ag Loan contact a Farm Plus Financial representative by calling 866-929-5585 or start your farm loan application online today.