Components of Character

Hi, I'm Dr. Dave Kohl, College of Agriculture, Life Sciences Hall of Farmer from Virginia Tech, in Blacksburg, Virginia. Today I would like to zone in on one of the five C's of credit, and that's called character. One of the things that we're finding, is that many agricultural producers are facing financial stress; and of course, character is extremely important. Let's talk about some of the components of character.

Number one, oftentimes does the borrower use the funds as agreed upon? One of the kisses of death is to take operating money and go out and make capital purchases, such as machinery or a down payment on land. Number two, are your statements, or your financial statements accurate? Within the zones of reason? In value and assets? In liabilities? Do you report all of those liabilities and do you report all of that income?

Another character assessment is the willingness to sacrifice lifestyle in the pursuit of a balance of business growth. Oftentimes, this sends signals, not only to the agricultural lender, but the community in general you're dealing with. Another character assessment is good communications of goals in good times, as well as difficult and challenging times.  If you do have a problem, do you alert, and are you willing to work side by side with your agricultural lender to correct the situation?

One thing that I really notice as far as character, if an association offers an educational program, do you sign up and do you follow through on the commitments? Oftentimes, character is measured by actions, not by words. Finally, will you accept constructive coaching? Oftentimes, constructive coaching, critical thinking has to occur, sometimes it will challenge your paradigms of thinking. However, this character component, all the things that I've mentioned, are extremely important to, sometimes offset some of the financial deficiencies that you may have on the balance sheet, cash flow, and income statement. Well, we'll see you on the next time.