One of Your Top 3 Expenses… and Barely Questioned?

Interest payments are often one of the top three expenses on a farm business’s profit and loss statement. When other costs blow out like fuel, fertiliser or repairs most farmers take a good hard look at what went wrong and what they can do differently next season. But when it comes to high interest costs? It often gets left alone.

In our experience, there are four common reasons why farmers hesitate to review their finances: Knowledge, fear of change, complacency, and time.

In this blog, I break down each of these barriers and share how some of my clients have worked through them to reduce their interest rates and save money for future seasons.

Knowledge – You Don’t Know What You Don’t Know

If you’ve only been offered one rate, it’s hard to know if it’s a good one. Even when clients go back to their bank manager to ask, “Is this your best offer?” the conversation often ends there.

In a recent review of my existing client rates, I came across a long-term client who had been performing well. Based on how some of my other clients with similar businesses were being priced, I knew their rate wasn’t where it should be. Their current bank wasn’t keen to renegotiate, so I took their business to tender. The result? A 0.7% rate reduction that will save them thousands over the next few years.

Fear of Change – What If the Grass Isn’t Greener?

Changing banks can feel like a big deal, especially during dry seasons or uncertain times. I often hear concerns like:

“What if we have a drought in our first season with the new bank?”
“Our current bank has stuck with us through the tough times.”

While it’s great to feel supported, that doesn’t always mean you’re getting the best deal. Another lender might offer the same level of support and a better rate. It is important to remember that bank managers are humans too; they want to support where they can, and a bank will not take on a client that they cannot think they can support for one or two poorer seasons. A strong performing farm with solid equity is an attractive customer, even in dry years, and there may be lenders willing to support you and offer a better rate.

Complacency – Loyalty Doesn’t Always Pay

You’ve been with your bank for 20, 30, even 40 years. That history counts for something, right? Unfortunately, not always when it comes to interest rates.

(If youv’ve read my other blog posts, here’s where I sound like a broken record…)

I had a client who went out to tender and got better offers from other lenders but chose to stay with their existing bank because they liked their manager. Not long after, that manager moved on. While I absolutely believe that a good bank manager makes a difference, your business still needs to come first.

If you choose to refinance, and the relationship isn’t quite right, I’ll work with the banks to help you find a manager who is a better fit. You shouldn’t have to choose between a good relationship or a good deal, you can have both.

Time – You’re Busy Enough Without Chasing Banks

Let’s face it organising information for a bank review isn’t most people’s idea of a good time. It is extremely time-consuming, and banks will often come back needing more and more information. It is understandable when you’re busy running a business that an interest rate review may be pushed to the side.

That’s where we come in. Yes, I’ll ask you quite a few questions up front (here’s why ), but that’s so I can really understand your business and take care of most of the heavy lifting. I’ll prepare your application, field the bank’s follow-up questions, and put your best foot forward so you can keep the farm running. A little investment now can benefit you big in the long run. Plus, our relationship is ongoing, so when it comes time for another review, there will be fewer questions from me as I will already have most of the information I need.

 Client Story: 1.13% Savings Without the Headache

We recently worked with a farmer who hadn’t looked at his rates in years. Not because he didn’t want to—he just didn’t have the time to pull everything together and go through the hassle of presenting it all to the banks.

That’s where we came in.

We took care of the paperwork, put his business out to tender, and ended up saving him 1.13% on $3.5 million worth of lending. That’s a massive annual saving just for taking the time to review things properly.

It’s a good reminder—just because your rates aren’t keeping you up at night, doesn’t mean there isn’t a better deal out there.

How can we help?

Interest is one of the biggest costs in many farming and commercial businesses. Without a review, you cannot be sure that you are getting the best rate and saving yourself the most money. In the top 4 setbacks to interest rate review, we can help in the following:

1. Knowledge – We specialise in agribusiness and know what’s out there. We compare your rates to others in the market and help make sure you’re getting the rate you deserve.
2. Fear of Change– With Purvis AgriFinance in your corner, change doesn’t have to be scary. We’re a constant in your business, we’ll help make the transition as smooth as possible and ensure it’s the right decision for you.
3. Complacency – We keep lenders honest. Even if you stay with your current bank, we’ll make sure you’re not paying more than you should be just because you have been loyal.
4. Time – Reviewing your rates is our job. We take the admin off your plate, handle the bank questions, and build a strong case on your behalf so you can get on with the day-to-day of running your business, or even spend a bit of extra time off farm.