This is the time of year for farmers to begin prepping for an operating line of credit for 2026. Austin Peiffer, an associate attorney with Ag and Business Legal Strategies in Cedar Rapids, Iowa, says lenders will want to see, among other things, a cash flow projection for next year.
“What are you going to plant, how much it’s going to cost to put in, how much do you expect to make taking it out. They want to see that you have a good margin in that you’re not just barely scraping by, but you’ve got enough profit so that there’s some protection for the bank if things turn south.”
Peiffer says your banker will also need to see your up-to-date balance sheet.
“They want to see that you’ve got more than enough money to meet your short-term obligations with short term assets. in general, they’ll want to see that you’re solvent, too. They’ve got ratios. They’re looking for that their regs and policies provide for that say, okay, when these numbers are in this range, the loan is probably going to be good.”
As always, you should consult a CPA and tax attorney for further assistance.