Looking to finance your ag operation? On any given day you have numerous banking options- local commercial banks, national chains, maybe even an online option a friend told you about.
Among all these choices, what makes Capital Farm Credit stand out? You may know we specialize in agriculture, or about our cooperative structure and the value of our patronage program. But, do you know about the added value of our consultative lending approach?
"We are not a transactional lender," says Kody King, VP Relationship Manager for Capital Farm Credit.
Capital Farm Credit knows one size doesn't fit all when it comes to agriculture and rural Texas. We offer a range of loan products with competitive interest rates and services with Texas farmers, ranchers and rural homeowners in mind. "I like to refer to Capital Farm Credit as a consultative lender," says King.
What is a consultative lender?
"A consultative lender listens and provides valuable advice, direction and solutions versus only offering a one-and-done option," says King. "Your lender should be a vital part of your team, working together for the success of your operation."
Capital Farm Credit works with you to create your game plan for success. A plan that is unique to you and/or your operation based on your priorities and goals. King takes CFC's slogan "Together we're better" seriously. "We don't operate as order-takers or givers, but as your teammate."
"Rather than just give someone a loan, we want to be involved in the overall decision process," says King. "We'll often lay out a customer's financials and incorporate a comprehensive view of their operation. Formulating a comprehensive budget is one of the first aspects we address."
According to King, it is important that an operation's budget be based on their specific situation, type of operation, financial strength, realistic numbers and include conservative projections. When it comes to operating loan renewals, many banks will merely ask for updated financials, run a quick analysis for approval and get you to sign your closing docs.
According to King, "CFC sits down with our customers, discusses their plan and formulates a budget to determine what size loan they need and their profit expectations for the year. When we're working on a farm plan and budget, it usually involves identifying different crops and 'what if scenarios' to determine the best option for the customer."
Having a lender that is familiar with realistic production costs, yields, commodity future prices and risk management options is invaluable. With a structured budget, agricultural operations can make the best decisions, avoiding missed opportunities and financial stress.
Real world scenario
King provides a specific example, "I had a new operating loan request from a large farmer in Ochiltree County who had historically planted corn on all his irrigated land. He knew what size loan he needed. Transactional lenders would have the loan approved and closing documents signed."
"Instead," explains King, "we sat down and worked together through a budgeting process to compare corn and cotton. To his surprise, our cotton projections showed a $150/acre net return advantage. It took him awhile to get comfortable with the idea of this change, but as a result of this process, he decided to plant half his acres in cotton. The result was a net return gain of more than $200/acre. With the added income, he was able to pay off an equipment note, and is planting more cotton this year."
You owe it to yourself
How much value is there in a consultative lender? For this Capital Farm Credit member it resulted in a net profit gain of $288,000.
"With the right lender, whether you're making a land or equipment purchase, or need operating capital, you can make informed decisions to successfully meet your goals," affirmed King.
Partner with a lender that provides knowledgeable and experienced consultation based on sound economic principals.