Contact ag lender early

The natural inclination in business, such as ranching for instance, is to keep expenses low by borrowing money at the last possible moment and not get the interest bill running too early.

That may not be the best strategy in spring, 2009. Credit markets are roiling, and as another story in today's paper points out, even the most credit-worthy borrowers of long standing at a financial institution--are having trouble keeping their credit lines together. The Bush TARP funds have largely been a bust, and bank liquidity is worse than ever.

The new administration might do what should have done in the first place, which was to buy bad loans from banks at a discount and group them for resale at even bigger discounts. That wasn't done, despite what was advertised, so some $350 billion has disappeared down a rathole--leaving bank credit availability as dicey as its been all year.

The old true cliche is that the worst time to borrow money is when you need it. You've got to arrange a line of credit when your bank accounts are flush and the bills aren't yet coming due. Even the slightest hint of desperation in a loan application or interview with a lending officer, and they'll immediately freeze and assume you're filing bankruptcy.

From long personal experience, that's how you've got to do it. But it isn't good enough any more.

Bankers have been cutting, and even completely pulling, lines of credit all the last year. No matter how well-cemented you may consider your relationship with your banker, that's all history now.

It would be well to visit your banker, and both of you lay all your cards on the table, sooner rather than later. An extra month or two of interest is nothing, compared to coming upon spring planting or finishing calving, with cattle to carry through to fall, and discover that you don't have any operating money. Finding out early at least gives you more options, and more importantly, the time, to pull a few rabbits out of a hat.