How does your banker view your financial condition? Bankers tend to make their assessments on the individual but there are some broad measurements bankers look at. Details in a moment.
Curt Covington is a former Ag banker now with Farmer Mac Bank.
“Every borrower fits into one of four categories in a bank. You’re either an acceptable credit risk to that bank. You have plenty of cash flow, good colateral, good character etc.,” Covington says.
He says or you move into category 2 which is where the borrower has had a hiccup.
“That hiccup maybe requires a hiccup refiance of some real estate to provide liquidity. Alot of growers in the Midwest have had a hiccup due to where low commodity prices are,” Covington says.
He adds the most important thing is not get into category three and four where you lose good standing with the bank.
Covington was on a panel discussing current conditions in the Ag sector. That panel took place at the National Ag Bankers Conference in Milwaukee earlier this year.