The past couple of years have been extremely tough for farmers, and your financials may not look the way you’d like right now. It’s easy to assume that a few poorer seasons mean there’s no chance of negotiating a better deal or exploring new finance options, and the idea of switching banks can feel especially daunting.

But a tough year (or two) doesn’t automatically rule out refinancing, securing a lower interest rate, or finding a more suitable lender. In fact, during your most difficult seasons, reviewing your options can be a smart way to protect your bottom line. Even small savings can make a big difference when conditions are tight, and lenders consider more than just last season’s results when assessing your application.

The Misconception

There’s a common misconception:
“If my latest financials are down, there’s no point approaching my bank or a new lender.”

We understand, it can feel daunting to approach a bank when your business isn’t at its peak. You might fear rejection, worry about damaging relationships with your current lender, or assume one poor year will outweigh your past successes.

While these concerns are valid, they could also be holding you back from securing a better deal. One bank’s “no” doesn’t mean every lender will say the same. Your current bank doesn’t have to know if you choose to explore other options, so your relationship can be maintained unless you choose to move. Finally, it is important to remember, in the same way that one stellar year won’t completely erase a history of challenges, one tough year won’t undo your track record of strong performance.

The Reality – How Lenders Actually Assess You

Lenders assess your business on long-term performance, so one bad year rarely paints the picture of a poorly performing operation, if that’s not the reality.

Most banks employ agri specialists. While they may not know as much about farming as you do, they generally have a solid understanding of market conditions. They know which years were droughts, when commodity prices dropped, or when input costs, like urea, became unbelievably expensive (as they are right now). In tougher years, they can often see the bigger picture, but it still helps to explain the specific reasons your business underperformed. Doing so not only shows that you understand your business inside out, but it also ensures they see your individual situation, not just the industry trend. If a lender can see that you are aware of your business’s downfalls in a tough season and are actively implementing strategies to manage and recover, it builds their confidence in your management skills and the long-term sustainability of your business.

Importantly, lenders don’t just look at income. They will also consider your asset position, equity, and security. So when you review your lending, don’t focus only on one year’s income; look at your overall position.

Why It’s Still Worth Reviewing Your Rate or Lender

Even if you’ve had a poor year, it may still be worth reviewing your rate or lender. Small interest rate improvements can add up to significant savings, and over the full term of your loan, these savings can be substantial.

It’s also worth remembering that while your loan is in term, and in good order, the bank is unlikely to increase your customer margin (unless you agree to a new arrangement). That means there’s little to lose in asking the question; in fact, we may be able to negotiate a margin reduction.

With the recent drought, we’ve had a few new and existing clients whose banks were reluctant to support them any further. In many cases, while the past year had been difficult, there was much more to the story. For example, one of our vineyard clients had their bank withdraw support after a bad season. What the bank didn’t see was the significant investment they were making to drought-proof and frost-proof their vines. These improvements were essential for long-term success, but, on paper, reduced net profit. We took their case to other banks, explained why the income wasn’t as strong, and presented historical figures alongside future plans. Not only did we secure a new lender, but we also achieved a 1.5% rate reduction, saving around $26,000 a year.

What You Can Do to Strengthen Your Case

If you are thinking about reviewing your rate after a poorer season, here are some tips to ensure you are putting the best case forward.

 Work with Purvis AgriFinance – We know how to present your financials in the best possible light, negotiate with lenders, and help you secure the most competitive terms.

 Gather multi-year financials – Provide at least five years of records so the bank can see the full picture. Over that time, it’s likely you’ll have at least one strong year, a couple of average years, and perhaps one that was more challenging.

 Highlight your best years and business potential – Draw attention to the seasons where your business performed well and show the long-term opportunities for growth.

Explain the reasons behind the poorer result – Be clear about the circumstances, whether it was seasonal conditions, market prices, or increased input costs.

 Show your plan for improvement – Detail the strategies you’re implementing to strengthen performance going forward.

Don’t be the one to say no

Don’t be the one to say no to lower rates; put your case forward, and let the bank decide for themselves. With the right preparation and clear storytelling, a “no” can sometimes turn into a “yes”.

And even if the answer is “not right now,” the process can still work in your favour. It sets the groundwork for future discussions, so when you have had a stronger year, you’re already in a better position to negotiate.

Thinking of Doing Something About Your Rate?

Even in the middle of a drought, we may still be able to help you secure a better interest rate. We offer a no-obligation chat to see what’s possible. We’ll review your financials and give you honest feedback on whether now is the right time to approach a new lender or negotiate a better deal. If it is, we’ll guide you through the process and present your business in the best possible way.