5 Types of Data Helping Ag Lenders Make Better Decisions
We are living in the agricultural data revolution. The data generated per farm is projected to exceed 2 million data points per day by 2030. Yet, traditional agricultural and commercial lenders still rely on only financial data to analyze a farm’s worthiness of loan approval. With so much high-quality data at our fingertips, a more holistic look at a farm is needed to open the industry and allow new farmers to enter and existing farms to grow.
Here are five types of data your ag lender should use when analyzing your farm.
On-Farm Data:
50% of US farms (and growing) use data management software. That data is helping farmers make better planting, harvesting, and irrigating decisions. It shows pregnancy rates, dry matter intake per cow, and milk fat percentage down to a single cow at A.M. milking. It is specific and intense. Aggregated and compared, it can help show how a farm stacks up – not with financial statements but with production data.
Supply Chain Data:
Agricultural supply chain data tracks the steps food takes as it goes from the farm to the consumer. If a lender can track the who, what, when, and where of your farm products, they can have greater confidence that 1) you will get paid and 2) they will get paid. This is called supply chain finance, and in other industries, lending intuitions give better rates and terms to a supplier if their buyer is highly rated.
Macro Data:
Macroeconomic data looks at the big picture of the economy. A lender relying on USDA and other government data can track the economic outlook of the country and the agricultural industry specifically. A lender can zone in on regions and specific commodities to see how the industry is fairing and analyze trends to predict future performance.
Personal Data:
Personal data like your credit score and employment history can give lenders insights into your character and help automate loan approval decisions. Collecting this data helps establish trends among borrowers to predict the likelihood of repayment.
Financial Data:
Financial data will always be part of agricultural loan approval. A balance sheet, income statement, and cash flow projection give lenders insight into your historical and future performance. But they need not be the end all be all. Working with on-farm data, supply chain data, macro data, and personal data can give lenders a more holistic look at the farm and the farmer.
The Bankbarn Difference
While traditional lenders may analyze 20 financial data points to determine risk, the Bankbarn credit models look beyond financials to the “total farm”- financials, on-farm data, macro data, personal data - anything our models determine helpful in understanding the farmer’s total business performance. A holistic approach to ag financing makes Bankbank different from the competition. We are fanatical about helping farmers and lenders grow their dreams.
