From the Farm: Farm Financials, 2021


DANVILLE, Ill. (WCIA) — With a new year on the calendar, farmers have wrapped up 2020 and they are starting a new season.

This marks the start of the lending season, at least for farmers with operating notes and other lines of credit, and they will soon be headed to meet with their lender. 

Dwight Raab of First Midwest Bank at Danville says take some financial records with you.

“Projected cash flow for 2021,” he says. “Detail out your priced bushels from your unpriced bushels.  That way we can show what we’ve got priced already for 2021. Put your family living expenses in there. Be honest. Again, those FBFM records would tell us that something over $80,000 would be the average farm family, family living expense. So just be honest about those kinds of things.

“An accrual income statement, and a balance sheet go miles to helping one manage their business.  I can tell much from one year’s balance sheet; but if you can provide me 5 years of balance sheets so I can look at a trend in a debt to asset ratio, a trend in working capital, a trend in debt repayment capacity, that makes the picture instead of almost two-dimensional, now makes it three-dimensional and really makes it come to life and tell how we can help somebody.”

Raab is the former head of Farm Business Farm Management at the University of Illinois. 

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