Tighter margins and the financial stresses in agriculture have left many Ag lenders weary right now of the farm economy and the profitability outlook for producers.
The latest statistic says that only 52% of U.S. farm borrowers will be profitable this year (according to the 2025 ABA/Farmer Mac Ag Lender survey).
Coupled with the fact that 93% of ag lenders expect farm debt to increase in 2026, all indicators show that farm loans will be in high demand.
Here, Pinion’s agribusiness advisors provide some recommendations to help prepare for tighter credit conditions ahead of conversations with your lender.
What to Know Before You Meet with Your Lender
Understand your records and financial strategy
Good records are not only essential to see where your dollars are going and where adjustments might make sense, they also provide confidence when sitting across from your banker.
“You have far more negotiating power when you can present a complete, up-to-date picture of your finances,” says Thomas Eatherly, farm business management advisor. “Showing that you’re in control of your numbers and operation is something that lenders value, especially when cashflows are tight and the market is uncertain.”
He advises producers to track inventory, expenses and cash flow closely – and use this data to make informed decisions about your financial strategy: purchases, sales, and financing.
“Farmers are playing defensive ball against the current market situation, so evaluating and following a financial strategy is critical. Margin discipline will matter more than ever next year. And having a plan to protect yourself and manage risk is non-negotiable,” he adds.
If you haven’t already, consider bringing in an advisor to take a snapshot of your financial well-being and help you formulate a financial strategy for 2026.
“This could reveal untapped opportunities – like an opportunity to take in more revenue to offset your deferred revenue,” says Thomas. “You want to go to your lender with every advantage point you can muster.”
Factor tax planning into your lender’s risk assessment
Tax strategy is a critical piece of managing your business through a down cycle. And low prices don’t necessarily mean a low tax bill, especially with high inventories or deferred sales in the mix. You will want to demonstrate that you have a strong and efficient tax strategy in place.
“Your financial decisions should match your long-term goals and cash flow needs,” advises Keaton Dugan, Ag-specialized strategic tax advisor. “A tax plan that takes this into account can help you to present a stable, compliant, and cash-flow-conscious profile that your lender can trust.”
“Tax planning should be forward looking. Project your future income needs the best you can and maximize lower tax rates. In a down year, it would also be a good time to consider getting out of a cycle that is dependent on bonus depreciation – a great opportunity to get back on a consistent, regular depreciation schedule.”
A strategic conversation with your tax advisor is crucial this year as it could positively impact conversations with your lender about the year ahead. “Simple adjustments—like the timing of equipment purchases, expense payments, or income recognition—can make a real difference in your position,” he adds.
Prep for FSA eligibility and maximization
“Supplemental income and government payments can help with cash flow and stability,” says Phil Newendyke, farm program services advisor. “From a lender’s viewpoint, they can help bridge the gap during lean years and producers should show realistic estimates and utilization of available programs – from revenue and disaster assistance to cost-share and conservation incentives.”
To prepare your operation for these opportunities, make sure your acres are accurately reported and that your local FSA office has your most current information on file.
“Staying proactive with paperwork and annually reviewing your farm operating plan will ensure you’re first in line when opportunities arise for future programs. This also demonstrates an extra layer of stability to your lender,” Phil advises.
Phil recommends seeking professional advice if a lender wants to secure operating lines of credit with a mortgage, guarantee, or cosigner by a landowner (personal or legal entity) other than the operator. Many lenders are unaware that this “tainted capital” is a violation of the actively engaged in farming rule and could result in ineligibility for some programs such as ARC/PLC.
Use your land as collateral
“Some positive news for many producers is that land values are (and are expected to continue) holding steady,” says Quint Shambaugh, land and conservation services advisor. “This provides you with collateral strength and some flexibility in your lending conversations.”
For additional long-term viability, many producers are exploring wind leases, solar leases, USDA programs, and regional conservation programs to supplement their income. These can be a good option to mitigate financial uncertainty and help with cash flow.
“We recommend consulting a professional to assess your land’s potential and protect your most valuable asset. They can uncover overlooked financial assistance, confirm program eligibility, identify new opportunities, and ensure the long-term viability of your operation,” adds Quint.
Preparation is Key
Above all, it’s important to prepare your business in advance so you know where you stand. This will position your agribusiness in the best light ahead of conversations with your lender. The tone you set today can determine the credit you’ll have tomorrow.
Preparation entails:
- Keeping solid books and understand what they mean.
- Strengthening your risk management plan.
- Structuring to maximize program opportunities.
- Staying in close contact with your trusted advisors.
- Keeping an eye out for opportunity.
