HOW ARM WORKS WITH FARMERS
Every farm situation is different, and many financial challenges arise through no fault of the farmer. Listening to a farmer’s pressure points allows ARM to adapt and fit that farmer’s situation. Next, attention shifts to the farm’s balance sheet and cashflow. ARM needs to understand the leverage position on the balance sheet to attract alternative financing solutions. Then it becomes possible to secure a line of credit for the season.
After identifying a financing solution, ARM sets up a systematic process to help manage risk. For example, ARM helps the farmer acquire the proper amount of crop insurance, spend capital on the inputs required to realize the highest potential yield and pay the loan when the crop is harvested. This in-depth involvement in the operation increases the chance of success.
ARM also serves as an advisor to help farmers right-size their balance sheets. This might include recommending the sale of a parcel of land or a piece of equipment. These changes can put the farmer in a better position to secure financing through the bank in the following year.
“We’re not trying to compete with community banks. We can partner with the bank to help them continue working with a farm client when the financial situation or regulatory pressures might make that difficult.” -Jason Brown, ARM market leader
Partnering with Farmers
ARM wants to partner with the farmer, the bank, distributors and other input suppliers because the best approach gets everyone working together in the best interest of the farmer. Along with the loan, ARM offers farmers budget and risk-management advice. Having a deep understanding of crop insurance, they can guide a farmer through those discussions and decisions, as well.
The farmer receives a monthly loan statement, and at the end of the loan, ARM collects harvest information and conducts a reconciliation, showing the end results of the season. This can sometimes lead to finding a revenue insurance claim because of a shortfall. Or it might result in finding another area of budget leakage that can be corrected for the next year. Reconciliation helps the farmer develop a strong understanding of and confidence about where the dollars were spent and how that affected total production and return on investment.
ARM provides the support you need to get the most out of your farm. Struggling operations as well as those simply looking to tighten up their business practices can benefit from the ARM crop-as-collateral lending model and the guidance its experienced staff can provide. ARM does ag finance differently. Is it time your farm did, too?