An operating loan review is a conversation about trust. The lender wants to understand how much the business needs, when it will draw, and how it will repay. A well-prepared borrower makes that easy, and often gets a better outcome.
Requirements vary by lender and by program, so always confirm what yours needs. The materials below are commonly requested.
What lenders commonly ask for
- Financial statements, such as a balance sheet and income statement, often for several years.
- Tax returns, including Schedule F for many individual farmers.
- An operating budget for the coming season or year.
- A cash flow projection showing monthly or weekly draws and repayments.
- Production records, such as acres, yields, and herd numbers.
- Marketing plans, contracts, and crop insurance coverage.
- A debt schedule listing existing loans and payments.
Build the budget from drivers
Lenders trust budgets they can follow. Build revenue from acres, yields, and prices, or from head, weights, and prices, and build costs from cost per acre or per head. Show your breakeven prices. Explain any assumption that departs from history, such as a new rental farm, a change in crop mix, or a price above recent averages.
Show the cash timeline
The cash projection is where the line size comes from. Show when inputs will be paid, when you will draw, when sales will arrive, and when you will repay. Identify the low point clearly. A projection that shows you understand your own timing is persuasive.
Include a downside case
Show what happens at a lower price or yield. It demonstrates that you have thought about risk and helps the lender size the line to cover a bad year as well as a typical one.
Compare last year’s plan with what happened
If you presented a plan last year, bring a short comparison of planned and actual results, with the main reasons for any differences. Lenders value borrowers who track and explain their results.
Keep records organized all year
The easiest reviews come from businesses that maintain clean records continuously, with reconciled accounts, organized invoices, and up-to-date production data, rather than reconstructing them in a rush.
PursuitBid helps produce traceable budgets, forecasts, cash projections, and scenarios from your own records, exportable to PDF and spreadsheet editions that keep their assumptions.
Written by the Syntonyl team. This article is general information, not legal, tax, or financial advice.