Looking at Financials Beyond the Balance Sheet

As year end approaches, we know it’s time to start updating our balance sheets. The balance sheet gives a great snapshot of your operation, but when our loan team is looking at your financials, what else are they considering in the overall analysis? There are several other factors that come into play. Let’s take a look at the other key factors: 

1. The 5 Cs of Credit
   1. Character – ownership structure, parties involved
   2. Capital – owner equity, working capital and overall financial wherewithal. 
   3. Capacity – repayment ratios
   4. Collateral – security and its valuation
   5. Conditions of Approval – are there any special conditions to the operation and/or the approval such as terms
2. Management Experience and Reputation
3. Long-term Sustainability and Market Volatility
4. Business Plans and Projections
5. Credit History
6. Conservation Programs
7. Succession Plans and Generational Transfer

All of these items together help the AgCredit team understand the full circle of your operation and can tailor the right loan products and terms that fits your needs. 

To learn more, listen to the conversation with Nathan Buzard, AgCredit Credit Analyst, on the next episode of the AgCredit Said It podcast. This episode releases on Monday, November 4. Nathan goes into detail on each of these points and explains why they’re important.