3 Tips For Getting Current On A Troubled Farm Loan
Taking out a farm loan is a viable way of making updates or helping to make ends meet when you have a downturn in profits. In a perfect world, your profits would then go back up, allowing you to pay off the farm loan. But what if this does not happen, and you end up in a position where you're struggling to pay off the loan? Rather than fall further and further behind, here are some tips to help you get and stay current with your farm and ranch loans.
1. Consider changing crops.
What is the reason your profits are failing? Are you growing corn, although the price has fallen in the last few years? Is your alfalfa yield declining because rain has been scarce? Consider whether this might be a good time to change crops or add another crop to your repertoire. Maybe, for example, planting one field of soybeans rather than alfalfa would bring in a few thousand extra dollars, which you could use throughout the year to pay off the loan.
2. Ask if you can extend the payoff period.
Farm lenders tend to be more understanding than those at a typical bank. Give them a call and explain the situation. Tell them just how much you are short in terms of your monthly payments. They might be willing to extend your payoff period, which would result in lower monthly payments that you can afford more easily. For example, if you are currently paying $500 a month, they may be able to add a year to your loan payoff and lower your payments to $350 a month.
3. Look for ways to lower your operating expenses.
With so many farms already operating on a shoestring budget, this one is hard. But you should still see whether it is viable. See if there is a way you can cut back your operating costs to save the amount of money you owe on the loan each month. For example, are you feeding a supplement the cattle don't really need? Maybe you could cut it out and switch to a more fortified feed, resulting in a savings of $400 a month. Or maybe you could stop using heated water in the barn, resulting in substantial electrical savings.
If you're having trouble paying your farm loan, the worst thing to do is sit there and wait for the situation to resolve itself. Try some of the solutions above and see how you land.