Source: Tony James, area extension specialist, Kentucky Farm Business Management

It can be intimidating for anyone to communicate with financial institutions. Farmers often need to communicate with bankers about operating loans, so here are a few tips to make it a more positive experience.

First, know your numbers. Be prepared to talk about revenues, margins, expenses and cash flow. Have income statements and balance sheets with you before you start the conversation. Bankers still look for sufficient collateral, a good debt-to-income ratio and a solid payment history, so having all the information ready will help you have a more successful meeting.

Cash is still king. Be ready to talk about your cash flow management when talking with lenders. Cash flow is the total amount of money transferred into and out of a business. Bankers want to know about your cash flow and how you will repay the loan. Keep in mind that profit does not equal cash flow.

Bankers want to see a disciplined individual who can stick to a budget, so limit cash distributions. Be cautious about the impact of personal spending on your farm operation financial picture.

You can have a great relationship with your banker. Just remember to be open about your numbers and cash flow and control your personal spending.

For more information about farm finances, contact the (COUNTY NAME) Cooperative Extension Service.

Educational programs of the Cooperative Extension Service serve all people regardless of economic or social status and will not discriminate on the basis of race, color, ethnic origin, national origin, creed, religion, political belief, sex, sexual orientation, gender identity, gender expressions, pregnancy, marital status, genetic information, age, veteran status, or physical or mental disability.

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