Borrowing Time

Commodity Marketing

Tools

Borrowing Time

May 13, 2018 | 17:39 1 A piece that I had in print a few years ago. Any Relevance today?

Borrowing Time

40+ years in farming gives a decent perspective of the various developments in the "field"; the euphoria of the soaring 70's, the meltdown of the achin' 80's and the genesis of mega in the 90's and since.
There has been a sea change in attitude in the lending system. Twice, in fact. My first bank loan came at the end of the 70's and we never looked back since. (You can take that however you want, but a view tempered by negativity would be accurate.)

I'll never forget how Bill, manager at the local CIBC, would sit and discuss this optimistic young farmer's goals, and would then pull out a paper and sign over however many dollars he deemed safe to lend. It was a local decision, made on the spot, available immediately. Bill’s reputation for exercising good judgment may have been slightly exaggerated because he never turned me down.

In addition to operating funds, he lent me the down payment for my first farm while the balance came from FCC. The manager there at the time was Gordon and he was cut from the same cloth as Bill.

Why those two gentlemen would lend me even one thin dime escapes me to this day. Was it because what little equity I had was bolstered by brash ambition and sunny idealism? Somehow, I never let them down.

When I was looking for help to buy my first piece of land, Bill said "John, you realize that you have to come up with X amount of dollars every morning to make this payment?" I replied "Yes, but can't I have my breakfast first?" I'll never forget how Bill thumped his fist down on his desk with an emphatic “NO! The PAYMENT comes first!" Although I laughed at the time and do again now, there were many times in between when humor was missing.

A few years later when the crash of the 80's settled in, Bill and Gordon had retired and their trademark lending attitude left with them. The bank replaced those good men and their liberal lending practices with skinflint management pushing tight-fisted fiscal policies. We somehow paid our obligations and moved on.

Of course, there were those who had dug in too deep and in many cases the deeper the hole, the less responsible they proved themselves to be. Why should a debt be written off just because the borrower lacked fiscal prudence? Is bankruptcy just another way to leverage oneself “forward”? The integrity of the system was thus severely compromised, paving the way for even greater defaults in more recent years. A signature on a contract now means little, depending on whose it is.

So in view of that brief history, what does the current mood in the lending environment mean?
I find it gives cause for concern in that it mirrors the same free-spending stance that was prevalent in the '70's, but somewhat lacking the equivalent judgment sharpened by experience, as shown by Bill and Gordon. Combine that with a severe shift in the general moral and ethical compass of society…

I have nothing but the highest regard for the people currently working at TDBank, BMO or FCC.
But as a rule, they are also much younger than Bill or Gordon and have little understanding of the meaning of hard times. Indeed, a few years ago when I recounted to a young FCC account manager the financial pain of the '80's, he replied, "Yes, I hear other farmers like you (code for "old") talk about those days...” But how could they understand the impact of those times without having lived through them - as either a lender or borrower?

In recent years, I was amazed how easy it was to get whatever funds I wanted; amounts were offered that I would not have been comfortable in borrowing as a man of humble wants and needs. So that is why on a recent FCC survey I filled in one extra line for "Additional Comments". I simply wrote something like "Borrowing money is far too easy." I should have added, "Equity is great but it won't make payments." While I once thought liberal lending practices were great, today they frighten me.

JES/18/2/15 Reply With Quote
farmaholic's Avatar May 13, 2018 | 20:07 2 Burnt, I think the older we get the more averse to risk we become. We see and understand our mortality. We are no longer ten feet tall and bullet proof. Priorities change. Becoming content with what you have instead of wanting more, let alone needing it.

Credit Unions around here take little risk. FCC does seem overly eager to lend. I wished I would have put more of my equity to work for me during one of the cheapest periods there ever was to borrow money in my lifetime. Reply With Quote
May 13, 2018 | 22:37 3 At times there is a much wisdom on this site. Reply With Quote
makar's Avatar May 13, 2018 | 23:50 4 AFSC wont deal with me because i have to many input lines of credit totalling 0 and little debt, wanted to know my wifes finances, i refused. Reply With Quote
May 13, 2018 | 23:55 5
Quote Originally Posted by makar View Post
AFSC wont deal with me because i have to many input lines of credit totalling 0 and little debt, wanted to know my wifes finances, i refused.
Lol, exactly Makar.
The problem is you can’t even deal with anyone anywhere without establishing a “line of credit”
They look at you as if your from Mars if you a actually have a check in hand . Reply With Quote
May 13, 2018 | 23:55 6 Or a card it card ready to go Reply With Quote
makar's Avatar May 14, 2018 | 00:06 7 Thats what i couldnt beat into them, stupid part was they phoned me twice for my business. Reply With Quote