Applying for a Loan? Tips for First-Time Borrowers!
Man using calculator on desk with papers and computer

Applying for a loan can be an overwhelming experience, especially for first-time loan applicants and beginning or young farmers. The ambiguity of the process can be intimidating and you may not know where to begin - until now!


GreenStone and the Michigan Good Food Fund teamed up to provide an informational webinar series to guide farmers through the process of applying for a loan. During the webinar series, Loan Preparation For New and Beginning Farmers, GreenStone shared an overview of what to expect when applying for a loan as a beginning farmer, the importance of having up-to-date accounting, and the resources our Young, Beginning and Small Farmer program provides to support the next generation of agriculture.


Jennifer Whitford, VP of Lending, and Chad Zagar, VP & Managing Director of Tax & Accounting, discussed what you can expect during the loan application process and tips for beginning farmers. Watch the full webinar recording or check out these five lender-approved tips to prepare you for your first loan!


1. Stay organized. Whether or not you’re in need of a loan, when it comes to operating any business, it’s vital to have updated and reliable recordkeeping. Staying organized year-round allows you to make better decisions for your farm, and when it is time to apply, makes the loan prep work much simpler.


2. Separate farm from home. Regardless of your operation’s size or location, combining your farm and personal finances will eventually lead to unnecessary confusion and stress- especially during tax time. Even if your farm is located on your primary residence or you’re just starting out, keeping your finances separate will give you a better idea of your operation’s overall performance.


3. Prepare your financials. When applying for any typical loan, you’ll need to provide pay stubs, past W-2s, bank account statements and personal information. The same goes for applying for a farm loan, in addition to having an updated balance sheet or personal financial statement and a business plan. Keep in mind your business plan should have realistic goals that are within reach and reflect your farm’s previous performance or that of similar farms in the area.


4. Communicate with your lender. Once your information is gathered, sit down with your lender to discuss your farm’s goals. Having a strong and open relationship with your lender is crucial to ensure you are both on the same page and that the expectations of your farm align. Your lender is a great resource of information. Having a good relationship with your lender will only benefit you later down the road as your farm grows and your operation becomes more diversified.


5. Be patient. The loan application process doesn’t happen overnight, especially operating and land loans. The closing time for a loan can range from 2-6 weeks and is different for everyone. Have patience and ask your lender directly what you can expect if time is of the essence.


Getting financing for your farm is a detailed process unique to each individual’s scenario with one common factor: a financial services officer working in partnership with you to help find the best solution. Experts like them are a great resource who are ready to answer any questions you have. Using the five tips above and your lender as a guide will make your experience that much smoother.


To connect with a local GreenStone financial services officer, find a branch near you or learn more on our website about GreenStone’s flexible farm financing for young, beginning and small farmers.


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