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Picture this: You're sitting across from your bank manager, presenting a solid business case backed by millions in equity, only to watch them shake their head before you've even finished speaking. Sound familiar? You're not alone, and more importantly, you're not stuck.Many successful farming families find themselves trapped in what we call "banking taint" – a cycle where past decisions or perceived difficulties colour every future interaction with their bank. Once labelled a "problem client," even the most reasonable requests get scrutinized through a lens of suspicion rather than opportunity.

The Reality of Banking Relationships

David and Andrew know this frustration intimately. Third-generation farmers running a 1,500-hectare mixed operation in Waikato, they've built an impressive portfolio worth over $10 million with minimal debt. On paper, they're exactly the type of clients banks should be fighting over.Yet when they needed a temporary overdraft increase to manage cattle trading cash flows, what should have been a straightforward approval became a bureaucratic nightmare. Despite having equity that would make most bankers salivate, their current manager treats every request like a risky proposition."He's very risk averse," they explain, "but we know people who have him as a banker, and he's not risk averse with them as much as he is with us."

How Banking Taint Develops

Banking taint doesn't happen overnight. It often starts with a few challenging years – perhaps drought, market volatility, or unexpected expenses. Maybe you needed extensions on payments or had to restructure facilities. Even if you successfully navigated those challenges, the perception can linger.Banks form opinions, and those opinions leak into credit assessments. One consultant puts it bluntly: "You can't have a couple of years and make no money. You'll make a couple of bad decisions, and all of a sudden the banker thinks you're a couple of Charlies. So next minute, you're in Charlie land for the bank forever."They experienced this firsthand. When they successfully flipped a property for significant profit, financing the entire project themselves because their bank wouldn't support it, the bank never saw that success. It didn't improve their credit rating or change perceptions – it simply didn't exist in the bank's view of their capabilities.

The Cost of Poor Banking Relationships

Banking taint creates real constraints on growth and opportunity. They found themselves running a measly $250,000 overdraft facility for an operation that regularly handles cattle trading requiring $500,000 or more in working capital.When they proposed purchasing commercial property in Wellington, their banker flatly refused. When they needed facilities for property development, they had to self-fund despite having sufficient security. Each rejection reinforced the bank's perception that they were somehow risky, creating a vicious cycle.The irony is stark: a family with minimal debt relative to assets, multiple income streams, and a century-plus track record couldn't access the banking facilities that their financial position clearly justified.

Breaking Free: The Path Forward

Escaping banking taint requires a strategic approach. Simply changing bank managers within the same institution rarely works – the credit history and internal notes travel with you.The solution often involves three key steps:First, get your house in order. This means creating clear, comprehensive financial statements that show the true picture of your position. They had multiple trusts and companies that obscured their actual strength. Simplifying and clarifying your structure makes your story easier to tell.Second, develop a clear plan. Banks want to understand your goals and how you'll achieve them. Are you planning succession? Expansion? Diversification? Having advisors help articulate this plan professionally demonstrates competence and forward thinking.Third, consider a fresh start. Sometimes the best solution is finding a new banking relationship entirely. Different banks have different appetites for agribusiness, and different managers have different styles. What matters is finding alignment between your needs and their capabilities.

The Value of Professional Support

One crucial factor in successful banking relationships is having professional advisors involved in key discussions. When advisors participate in banking meetings, it signals to banks that you're serious about professional management of your affairs.More importantly, experienced advisors can spot unreasonable positions or unfair treatment. They know what's standard practice versus what's unnecessarily restrictive. They can say, "hang on, that's not quite true, because we know that you do this in other areas, so we would like that too."The banking landscape is becoming more competitive, with new players entering the agribusiness market and established banks fighting to maintain market share. This creates opportunities for well-positioned farming operations to find better terms and more supportive relationships.

Your Next Move

If you're feeling stuck in an unproductive banking relationship, you don't have to accept the status quo. The first step is understanding your true financial position and developing a clear plan for your future.At CMK Accountants, we regularly help farming families break free from banking constraints by presenting their stories clearly and professionally. We understand both the farming realities and the banking landscape, and we're not afraid to challenge unreasonable positions.Don't let banking taint hold back your operation's potential. Contact CMK Accountants today to discuss how we can help you present your best case to the banking market – whether that's with your current bank or a new one. Phone us on 06 765 6178, email cmk@cmk.co.nz to start the conversation about unlocking your farming future.