Which financial statements do farm lenders ask for?
Most lenders ask for three core statements: a balance sheet, an income statement and a cash flow statement or projection. Tax returns are usually required as well, but the lender needs more than the return to see the whole farm. Some also ask for a statement of owner equity and a schedule of debts.
Each statement answers a different question. The balance sheet shows what the farm owns and owes at one point in time. The income statement shows profit or loss over a year. The cash flow statement shows money moving in and out, which is what repays the loan.
Put the statements together in the same period so they match. A balance sheet dated at year end should line up with the income statement and the tax year it covers.
What does the balance sheet tell a lender?
Iowa State's Ag Decision Maker describes the balance sheet as a snapshot of financial position on a given date, with net worth equal to assets minus liabilities. Lenders use it to see liquidity, equity and how much of the farm is financed by debt.
Comparing year-end balance sheets also shows progress. Is net worth growing, and is the debt load falling or rising, and why?
Lenders also compare balance sheets from year to year. A farm with several years of consistent statements is easier to evaluate than one that appears with a single set of numbers.
- Current assets and liabilities: due or usable within 12 months
- Fixed assets and liabilities: longer term
- Cost versus market values: lenders usually ask for both
- Net worth: the owner's equity
What does the income statement add?
University of Minnesota Extension explains that a cash-basis Schedule F is a poor measure of profitability by itself, and that an accrual-adjusted income statement accounts for changes in inventories, receivables, prepaid expenses and payables. That is why a lender may ask for an accrual-adjusted version rather than relying only on your tax return.
The adjusted result shows whether the farm earned a profit in the year, not just whether cash came in. Lenders use it with ratios to judge profitability and efficiency.
Ask your preparer whether the accrual adjustments are done each year. Doing them regularly is easier than rebuilding several years at once.
Why is the cash flow statement so important?
A farm can be profitable on paper and still short on cash. The cash flow statement lays out when money arrives and when payments are due, month by month or season by season. A projected cash flow shows the lender how a new loan would be repaid.
Include family living, taxes, term debt payments and capital purchases, not just crop and livestock costs. Missing items are the most common reason a projection does not hold up.
A monthly cash flow also helps you see when your line of credit will peak, so you can plan draws and talk with the lender before they happen.
How do you keep statements accurate and useful?
Use the same method each year so the numbers are comparable. Reconcile your statements to your tax return and bank records, and be ready to explain differences. Note the values you used for land, machinery and inventory, and how you estimated them.
Software and spreadsheets from land-grant universities, such as the Center for Farm Financial Management at the University of Minnesota, can help, and your local extension office can point you to workshops.
Review the statements yourself, not just your preparer. You should be able to explain every number in the room.
What mistakes do borrowers make with financial statements?
Common errors include leaving off debts, using inflated market values, mixing personal and farm items, and handing in statements that do not tie to the tax return. Lenders notice these things, and they affect trust.
A short cover page explaining your assumptions and any unusual items can prevent questions. Update statements before meeting your lender, not after.
Keep supporting records for at least as long as your lender and tax advisor recommend, since you may need them later. If you are new to preparing them, a short workshop through your land-grant extension service is often the fastest way to learn, and many offer templates at no cost.
Key takeaways
- Lenders typically want a balance sheet, income statement and cash flow statement.
- The balance sheet is a snapshot; the income statement measures profit over a period.
- An accrual-adjusted income statement gives a clearer picture than Schedule F alone.
- A realistic cash flow projection shows how a loan will be repaid.
- Use consistent methods and make sure numbers tie to your tax return.
Sources and official links
Last reviewed: November 12, 2026. Written by the Farm Money & Grants Editorial Team. Educational only, not tax, legal or financial advice. See our editorial policy.