Now is not the time to waive, omit, or procrastinate solid credit practices – such as inspections, onsite verifications, or similar procedures. An ounce of prevention or inspection will alleviate loan fraud.
The last few years have been challenging for all Ag producers. Challenging commodity prices, tariffs, weather, changing consumer preferences have all affected farm revenues. We have met with several banks whose borrowers, faced with the financial challenges of paying bills and meeting family living expenses, have sold cattle – yet, the funds never made their way back to the bank loans that financed the cattle in the first place. In one case, the cattle had been sold over the last few years, and in another instance, the transactions were only in 2018.
Bottom line to prevent loan fraud – don’t postpone your inspections; do file your security agreements, follow your procedures, and stay in contact with your borrowers. You want your best customers to remain your best customers.