When it comes to borrowing money, we tend to think about interest rates first. It’s the “go-to” discussion point. Most everyone seems to have a story to share regarding rates. Maybe it’s bragging rights on a great deal your neighbor received on his latest cattle loan. Perhaps you know someone who feels they received a rate that was too high. Like the weather, interest rates are discussed at home, at the office and at coffee shops everywhere. It’s understandable. The interest rate you pay on a loan is one of its most important factors and has a direct impact on your payment and overall loan cost. It is a critical part of the deal.
I would suggest that there’s another factor that can and often does surpass interest rates in terms of overall importance in borrowing money. The relationship you develop with your lender, and his/her support staff over time, can be even more important than the rate itself. A strong borrower/lender relationship will incorporate many attributes that relate to a producer’s long-term success. Some of these include:
• Communication – A good relationship lends itself to a high level of communication. This works both ways. Good communication is more than a text or email – talking in person or over the phone is a great way to better understand and learn more about one another.
• Timeliness – When we maintain in contact, we become “top of the mind” when specials or loan enhancements become available. Make it easy for your loan professional to think about you – in a good way.
• Openness – A strong level of communication allows for trust and the ability to share honest information openly with one another. Many loan problems can be worked out to everyone’s satisfaction when there is a good relationship in play. Said another way, many loan problems occur or worsen because a strong relationship and a high level of communication did not exist.
• Being Personable – As a relationship grows and develops, one gets to know more about family, friends and other more personal aspects within the relationship. This, too, can lead to a higher overall level of satisfaction and understanding between the two parties.
A strong borrower/lender relationship will enhance your farming and business results through good communication, thereby minimizing surprises. Effective on-going communication will foster better trust and can often bring to light some new information that will help your business.
Work on your relationships and let that effort reward you over time – it may even lead to a better rate.
