When a season goes badly

Key points

• If you think you may miss repayments, talk to your lender early, before it happens.
• Many lenders have hardship options. What is offered depends on the lender and your situation.
• Free, independent financial counselling is available in many places, including for farmers.
• Look after yourself and your family as well as the books.

Hard seasons happen

Drought, flood, fire, frost, disease or a sudden drop in prices can hit even the best-run farm. When income falls, loan repayments, supplier bills and living costs do not stop. It is stressful, and it is not a sign of failure.

The most important thing is not to go quiet. The earlier you speak up, the more options there tend to be.

Step 1: Get a clear picture

Before you call anyone, try to write down where things stand:

• who you owe money to, how much, and when each payment is due
• what income you still expect, and when
• what costs you can delay or cut
• what you need to keep the farm running and your family fed

The cash flow planner can help you lay out the next few months. It does not need to be perfect. A rough picture is far better than none.

Step 2: Talk to your lenders early

Contact your lender as soon as you think a payment may be a problem. Explain what has happened, what you expect to happen next, and what you think you can pay.

Lenders generally prefer to hear early. A missed payment with no warning can lead to fees, extra interest and a mark on your credit report. A conversation before that point can open up other paths.

Tips for the conversation

• Ask for the hardship or financial difficulty team by name.
• Have your account details and your rough cash-flow picture ready.
• Take notes: the date, who you spoke to and what was agreed.
• Ask for any agreement in writing.

Hardship options can exist

Depending on the lender, the loan and the laws in your country, options may include:

• a short pause or reduction in repayments
• a period of interest-only repayments
• a longer loan term to lower each repayment
• changing repayment dates to match when income comes in

These are not guaranteed, and they can have costs. Interest may still build up during a pause, and a longer term usually means paying more overall. Ask the lender to explain the full effect in writing before you agree.

Step 3: Get independent help

Financial counsellors can help you understand your position, talk to lenders with you and look at your options. In many places this help is free and confidential, and some services focus on farmers and rural businesses. Government agencies, farm groups and community organisations may also offer support or know where to find it.

Government agriculture departments and farm organisations in your country can usually point you to a free rural financial counselling service.

Your accountant can also help you understand the tax side of a bad year.

Be careful of quick fixes

When money is tight, offers of fast cash can be tempting. Some are very expensive or have terms that make things harder later. Take time to read any offer, compare the total cost and get independent advice before you sign.

Look after yourself

A bad season is hard on people, not just on bank balances. Talk to family, friends, neighbours or your doctor. If you are struggling, reach out to a support service in your area. Asking for help is a strong thing to do.

How we can help

If you have finance arranged through Pay In Time - Finance and are worried about repayments, you can tell us through our hardship request page. We can help you understand your options and, where you ask us to, talk to your lender. Your lender makes the final decision on any change to your loan.