Randy Huewe, an agricultural lender from U.S. Bank in Des Moines, Iowa, suggests some common-sense points to consider before you talk to your lender.

Cash flows are not income statements and income statements are not cash flows. Cash flows contain things like principal payments on term debt and equipment purchases; in-come statements do not. You can cash flow and not be profitable or be profitable and not cash flow.

Income statements should reconcile with your balance sheet in most cases. In other words, if your income statement says you make $100,000, then your equity should go up by $100,000. If it doesn’t, can you explain why?

Breeding stock should not be listed as “current assets” on your balance sheet, unless you intend to convert them into cash within a year.

Facilities and equipment should depreciate over time.

Cash flows and income statements should be accompanied by beginning and ending balance sheets for a given time period.

Show a breakdown of how you valued your assets. Show the number of head, number of bushels, acres of land and so forth. Also make sure you justify your values.

Include a payment sche-dule, including interest rates on all your loans. This should show a connection to the current portion of any long-term debt item that should be identified as a current liability.

Lenders generally want collateral that provides a 30-percent cushion. However, there are reasons yours might not, like contracts or other guarantees. That’s okay as long as you can explain it.

Explain who manages what and give a description of their background and experience. If you employ outside consultants describe them and what they do.

Explain any marketing contracts you have. Include a copy of the contract in the package to your lender.

Show that you have adequate land for manure application and/or a detailed manure management plan.

If you have more than one entity involved in the package and one of them shows a receivable from the other, make sure the second entity shows the same amount as a payable.

Huewe says these are common problems he sees from producers, but if you address these issues it will take you a long way down the road to meaningful financial analysis.