Strategic Financial Planning: Positioning Your Operation for a Stronger New Year

As the final days of the year wind down, the pace on your operation often shifts. The heavy lifting of harvest or winterizing your ranch is likely behind you, the equipment is being tucked away, and the focus moves from the field to the office. While the physical work slows, the “pencil work” begins.

At Ag Lending Group, we know that a successful season starts long before the first tractor pulls into the field; it starts with a solid financial foundation. Managing a farm or ranch today requires more than just knowing your soil or your livestock; it requires being a sharp financial manager. Taking the time now to review your debt structure, cash flow, and equity can be the difference between a stressful spring and a year of confident growth.

Here is a comprehensive guide to conducting afinancial audit for your operation and how the right lending partner can help you move the needle in 2026.

1. The Power of a Cash Flow Audit

In agriculture, cash is king, but timing is everything. Unlike a retail business that sees steady daily sales, most producers deal with massive seasonal swings. You might have one or two “paydays” a year, but you have expenses every day.

A year-end cash flow audit involves looking back at your actual spending versus your projections. Ask yourself:

• Where did the “leakage” happen? Did input costs spike more than expected? Did a piece of equipment require an emergency repair that sidelined your cash reserves?
• Is your working capital sufficient? Working capital (current assets minus current liabilities) is your safety net. If that net felt a little thin last year, it might be time to look into an operating line of credit or a bridge loan.

Having access to ready cash means you aren’t forced to sell grain or livestock at a lower price just because a bill is due. It gives you the staying power to wait for a better market

2. Navigating the Farm Loan Refinance Landscape

Many producers view their land loan as a “set it and forget it” expense. However, your debt should be as dynamic as your operation. Refinancing isn’t just about finding a lower interest rate—though that’s a great perk—it’s about capital efficiency.

Why Refinance Now?

The market is always in flux, but your goals change too. Perhaps when you first bought your land, you took a shorter-term loan with higher payments because you wanted to build equity fast. Now, maybe you’re looking to expand or bring a family member into the operation, and you need to lower those monthly payments to free up cash for their salary or new equipment.

By refinancing, you can:

• Extend your term: Spreading payments over a longer period can significantly reduce your payments, giving you more breathing room during lean months.
• Consolidate high-interest debt: If you have several smaller equipment loans or high-interest credit lines, rolling them into a single, lower-interest land-secured loan can save you thousands in interest and simplify your bookkeeping.

• Lock in stability: If you’re currently on a variable-rate loan, switching to a fixed rate can protect you from future market volatility, making your long-term planning much more predictable.

3. Putting Your Land Equity to Work

You’ve worked hard to build equity in your land. Using that value to secure your operation’s future—whether through refinancing or expansion—is a smart way to make sure your primary asset is working as hard as you are. This is where understanding your Loan-to-Value (LTV) ratio becomes critical.

If you’ve owned your land for several years, or if you’ve made significant improvements like installing new drainage or clearing more acreage, your LTV has likely gone down. If your land value has increased, you may be able to borrow against that higher value.

Common Uses for Equity-Based Loans:

• Purchasing neighboring land: When the parcel next door finally goes up for sale, you don’t always have time to save up a large down payment in cash. Using equity from your land can provide the leverage you need to act fast.

• Major Infrastructure: Upgrading grain bins, building a new shop, or putting in upgraded irrigation are high-cost items that pay off over decades. Financing them with land equity allows you to match the life of the loan to the life of the improvement.

4. Transitioning from Tax Planning to Tax Preparation

Now that the calendar has turned, the focus shifts from spending to documenting. While the window for year-end purchases has closed, a new window has opened: the opportunity to organize your financial story for the year ahead.

From a lending perspective, your tax returns are more than just a government requirement; they are a primary indicator of a professional, well-managed operation. When you come to Ag Lending Group for a loan, having a history of clean, consistent tax returns makes the approval process exponentially smoother. It shows us that you have a handle on your numbers and a clear vision for your profitability.

Collaborating with your CPA this month can help you:

• Organize Your Deductions: Ensure every deduction from your year-end purchases (like seed, fertilizer, or that new horse) is correctly categorized to reflect your true net income.
• Update Your Personal Financial Statement (PFS): As you finalize your 2025 records, it’s the perfect time to update your list of assets and liabilities. A current PFS is often the first thing a lender will ask for.

• Analyze Your Depreciation Schedule: Review how recent purchases will impact your cash flow in the coming years. Understanding your “non-cash” expenses helps you see the true strength of your operation.

When your records are organized early in the year, you’re not just ready for tax season—you’re ready for any opportunity that comes across your fence line. Whether it’s a quick-turn expansion or a Fast Track Loan, having your paperwork lender-ready in January puts you miles ahead of the competition.

5. The Fast Track Advantage: Being Ready to Move

Opportunities in agriculture don’t wait for bank committees to meet. If a piece of equipment goes up for auction or a For Sale sign hits a fence post down the road, you need to know exactly what you can afford.

This is where our Fast Track Loan comes in. We designed this specifically for producers who need answers, not excuses. By getting pre-approved now, you can enter the spring buying market with the confidence of a cash buyer.

• 24-Hour Turnaround: We aim to give you an answer quickly so you don’t miss out.

• Less Red Tape: We focus on the essentials that matter to ag producers, skipping the corporate hurdles that slow down big-box banks.

6. Planning for the Next Generation

Finally, use this year-end review to think about the long-term legacy of your farm. Is the next generation ready to step up? Succession planning is a heavy topic, but it’s a vital one. Often, the right financing structure can help facilitate the transition of land from one generation to the next without crippling your operation with tax liabilities or unmanageable debt.

Your Year-End Checklist:

• [ ] Review Balance Sheet: List all assets and current debts.
• [ ] Calculate LTV: Estimate your current land value vs. what you owe.
• [ ] Analyze Cash Flow: Did you have enough “operating room” this year?
• [ ] Schedule a Loan Review: Call your lender to see if your current terms still make sense.

• [ ] Gather Paperwork: Get your 1040s and balance sheets ready for tax season.

We’re Here to Help You Grow

At Ag Lending Group, we aren’t just here to sign papers; we’re here to see your operation thrive. We know the realities of Ag Life—the early mornings, the unpredictable weather, and the satisfaction of a job well done. We provide the financial expertise so you can focus on the production.

Tell us your story. Connect with our team today to discuss a loan refinance, a land purchase, or a Fast Track pre-approval. We look forward to working with you.

Visit us at www.aglendinggroup.com or call (602) 223-1236.