Cell grazing farm debts

There is no need to risk losing the family farm by keeping a farm debt that’s not helping you.

Cell grazing works well for your pastures, so why not apply it to your farm debt mortgage management.

Staying with your existing bank through tough times can eat away most of the original goodwill.

Think of bank lenders as cells. Have a good relationship with one and then move on before the relationship sours completely. As it is mostly done on line you don’t have to stay with a local bank.

Borrow Better by checking out fresh lenders to see which offers a farm debt to suit you best.

Over-patronising one bank can damage your farm finances, like overgrazing damages your paddock.

Independent of any bank, GBAC farm debt consultants are not paid commission by the bank like brokers are, to deliver you to them. GBAC is firmly on your side, seeking the farm debt that suits you best.

GBAC combines its own 4th gen. farming experience, accounting, tax and economics qualifications with a passion for fairness towards farmers.

Borrowing for profit

Borrowing for what? Profit?

Why do you run your farm or business? Is it to make a profit, because you enjoy it, because your family passed it down, or because you see a need for what you deliver to society?

You can rest assured that the bank moneylender from whom you borrowed, lends money purely to earn a profit despite its advertising. The fact that there is a great need for loans makes it easier for them. The fact that the market is substantially controlled by just four banks makes it easier still for those banks to overcharge and under-service those borrowers.

Then the fact that your elected representatives in Federal Parliament removed most regulations that protected borrowers, makes it easier still for them. The final boost that allows them to head this year for a collective $33 BILLION profit is that your state and federal parliamentarians sold off the government owned banks to remove the honest customer-focussed competition.

A profit of $33 billion means that the banks charged customers $33 billion more than what it cost them to deliver their banking services. It also means that your farm or business is being drained of much more income by the banks, than is necessary for them to make reasonable profits.

Defensive strategies
No matter what reason drives you to run your farm or business, you can see that there is scope for you to improve the profit it delivers by borrowing better. That requires two strategies that we have developed to assist you.

Make Banks compete
First you can make the banks compete for your business. There is only one factor that drives banks to lower their prices. That is competition from other banks. It does not happen naturally any more than your farm or business runs naturally, without effort on your part, though many consumers may act as though it does. Way back when banks were first deregulated in 1987, I invented what we called then a Moneygram to get banks competing for the business. Borrowers then bargained down their interest rates by up to 6%. Because of confusion with a global service run for transferring money overseas, we renamed our service “Borrow better”. That name better explains what it enables borrowers to do.

Low cost big impact
Borrow Better is very cheap and it begins your borrowing experience with you in control. You offer your loan business to many banks. Banks knowing that they can earn extremely good money from it, offer you what you want. You can then bargain down the interest rate, the bank charges and the loan terms. That puts you in a far better position than using a broker to whom the bank pays about $7,000 for delivering your business to the bank on a plate. Who do you think eventually covers that brokerage? You! To whom do you think the broker’s loyalty lies when it is the bank that actually pays the money to them? The bank!

Parliament throws borrowers to the moneylenders like Romans threw Christians to the lions.

calm the beast — We calm the lions and the banks so they don’t tear you to pieces.

You can join the bank customer Voterlobby we have formed to encourage your elected representatives to once again insist that banks be fair to borrowers and to accomplish that, establish government owned banks with their prime purpose being to serve the voting community, with profitability an important but secondary consideration.

Fair Go for Borrowers
GBAC exists to inject a measure of fairness into the farm and business moneylending industry. Borrowers deserve that. We have, for some 50 years, helped borrowers big and small all over Australia, receive a better, more profitable and suitable loan facilities. We have run our own farms and businesses and so know what it is like to be on the other end of a long term loan facility. We also know what it is like to run a farm or business in the fairly difficult environment that Australia provides.

Those who engage us permanently to mentor them in financial matters knows that there are many other ways to boost farm or business profits by minimising your debt to cut the interest bill. Loan repayments including interest are often the biggest expense on a farm or business.

Qualifications and experience make a formidable combination
In running our own farms and businesses we found that having mentor consultants available with specialist knowledge was a substantial benefit. We could not know everything about the law, animal health, weeds, tax or debt management, but we sought help from specialists. By combining the qualifications of a Chartered Accountant/CPA, Chartered company Secretary/Administrator, and Fellow of the Institute of Company Directors with the experience of running our Chartered Accountancy Practice, two hire companies, a real estate development company, a merino wool producing sheep property in the middle of NSW and a beef cattle property in the Southern Tablelands of NSW, financial analysis with international corporations and engagement with parliaments throughout Australia on behalf of voters, we have developed a keen insight into borrowing better to take a bit of the profit from the banks and put it into our clients’ pockets.

Business Borrowers can Borrow Better

It is one thing to take out a personal mortgage loan to buy a home when the borrower has a secure job with a salary that will provide plenty of funds to cover repayments. However, business owners know that their profits can vary from year to year depending on a variety of factors, not all are under their control. Cashflow can also vary even more frequently in an unstable economy. It is important that they obtain a loan with the very best interest rates and the most flexible terms to accommodate those variations without the bank disrupting cashflow by unreasonable demands. Banks always give themselves great power in the fine print of their loan contracts.

The Borrow Better facility puts borrowers in charge. That is a big change from working with a bank or a bank-paid broker, where the bank begins and remains in charge of the loan facility. When four or five banks have competed to lend to a business and the business owner after some discussions and analysis of the loan offers, has chosen one, that bank looks after them and the other banks stand ready to pick up the business should that banking relationship sour in the next year or so. It also means that instead of a very substantial brokerage fee being partly paid as an establishment fee and partly capitalised into the loan repayments, the chosen bank will probably reduce or eliminate the loan establishment fee.

Businesses that have used the Borrow Better facility, have run with the same lender and excellent relationships through good times and bad for decades. That may be because most have engaged The Borrow Better founders GBAC business loan consultants to ensure that the loan is serviceable by the business and that the business is run on sound profitability principles so that it can always cope with the loan.

Free LoanCheck

With prices falling and seasons in doubt, the debt risk is increasing daily for many farmers.
Some are managing their farm loans well. Some are just hoping for the best!

Get a quick, free, GBAC LoanCheck to assess your options before the bank does.
Email greg@gbac.com.au .

Loans are just like fences and yards.
They need to be checked for maintenance.

Most borrowers do not know all the terms and conditions the bank has written into the loan.
Those terms are like wire in a fence. If they are broken, the loan can collapse.
That can lead to extra stress and loan costs that nobody needs when things are tough.

We know bank debt because as well as consulting all over Australia, we have run our own sheep and cattle properties. Only farmers know what it’s really like to handle a mortgage loan along with the challenges of weather, prices and government policy.

Don’t let loan default spoil your Christmas

Aussies have some unique ways of reacting to problems. The swagman jumped into the billabong,

but today’s Aussie borrowers might want to square up to the multi-billionaire banks with their multi million dollar executives and demand a bit of respect. GBAC helps borrowers do that from a position of strength rather than one of being the underdog, kicked around to enrich the bank.

Borrowers in default on loans can shore up their defences with some very effective strategies.

13,000 Australian borrowers are currently said to be at risk of loan default. APRA says it is modelling how safe the banking industry is from recession. Nobody bothers to model how safe those farm and business borrowers or home-buyers are from foreclosure.

That is why we established our GBAC debt consultancy years ago for small business owners and farmers. I have owned family farms and businesses. When default looms, borrowers can act fast to make themselves safe from foreclosure. Business debt mediation and farm debt mediation are options that should be strategically prepared for very well, as the bank will use ruthless experienced officers and lawyers. They are more of a last resort.

Votergrams can also provide a very effective remedy for home loan borrowers who have been cheated, misled or robbed by the bank. Votergrams enable borrowers to inform the parliament of what the bank has done wrong and to seek help. Given the massive dishonesty of major banks revealed by the Banking Royal Commission, MPs are very willing to assist.

Refinance is always an option. It can be a very good way of dealing with bank loan or debt problems. We offer a cheap and effective Borrow Better service that helps borrowers get the cheapest and best loan available. It is no good hoping that a broker paid by the bank is going to negotiate the cost and terms of your loan down for you. They are paid to make money for the bank.

I am not a fan of restructures like debt consolidation because that puts “all you eggs into one basket”. If the consolidated debt gets into trouble it can cause a storm rather than a shower. Better to have your debts spread a bit so that you can negotiate with each lender and if one gives you a hard time then it only affects a small part of your total debt. Debt help is always available from www.gbac.au and in my experiences the faster it is sought the sooner the problem is solved.

The Aussie debt solution is to take on the bank and fight like made for a fair go. Billionaire banks can easily afford to make concessions that help their borrower customers. Without the borrowers the banks would go broke!

Protection Racket looks after Big Bad Banks

Banks knew interest rates would rise. Borrowers did not.

Thousands stand to lose their homes, deposits, repayments, businesses or farms. Banks will patiently wait until they trip up then pounce. Banks collect interest in all those years as they wait.

There are many bank debt solutions for borrowers . If you or someone you know is threatened with foreclosure, or under pressure by the bank, contact us at FairGO or GBAC for a FREE chat.

Why would Federal Parliament, ASIC provide protection for dishonest banks?

We will not be stopped from helping home buyers by the federal Debt Management Services regulation designed to protect dishonest banks from our forensic investigation into their home loan practices. Maybe it was introduced in 2021 during Covid as a temporary measure but the Federal MPs need to get rid of it now. They did enough damage to customers by deregulating banks in the late 1980’s. Ever since then federal and state taxpayers have been paying to help out borrowers entrapped, lied to , cheated and misled by their deregulated banks.

Banks are earning billions and can afford to stand by customers when things get tough. They just don’t care!

GBAC will not stand by while bank customers suffer.

We will help borrowers out within that cruel law, as we have done for borrowers all over Australia since federal politicians first de-regulated banks in the late 1980’s, allowing them to rip of customers as the Royal Commission discovered.

That is why GBAC bank debt solutions has just launched “Bankwatch” to run the same sort of Votergram campaign as Roadwatch did when it reduced the road toll by 70%. In those days the road transport industry behaved like the banking industry does now. But the truck drivers joined Roadwatch and reported on their corporate bosses. Now bank customers and staff will be able to discretely report their director and CEOs to every member of federal Parliament

Banks think that their big political donations protect them, but through our GBAC and Votergram services, we have provided Australian voters with more power and influence than voters have in any other democracy in the world. As Normie says “You don’t have to suffer in silence”.

Make Profit a Priority

There are two solutions to clearing a loan. One is to make a profit. The other is to borrow more debt to pay out the original loan. The second is not a real solution because debt remains, but it is the more dangerous because when people borrow a new loan ton pay out an old one they usually borrow more not less. When we negotiate with banks to get a substantial debt write off for the business or farm owners we are then able to refinance with another lender for a lower amount of debt. It is not usual but we have had a bank write off 50% of a loan and then retain the borrower as a customer. That is what I call a good bank. But back to making profit a priority.

Profits can be thin on the ground in many family farms and businesses, particularly when times are tough. At any one time they depend on a number of factors.

Mind power
The first aspect of profit is mental determination to make a profit. If you do not make a profit what is the point of running a family farm or business? Not only that. The alternative is making losses and they may well lose the farm or business in the long-run.

That involves spending less than is received in income. Never think of it as earning more than you spend because you can control what you spend but you cannot control what you receive in revenue.

Loan management
When money is borrowed, there is often insufficient attention paid to the cost of interest and charges. Bankers are brilliant at glossing over the cost of the loans they constantly promote as the solutions to all our problems. I am very conservative so I prefer a fixed interest loan, but that costs more initially than a variable interest rate loan. Trouble with a variable rate loan is that the rate can rise. I have had to sort out problems with loans on which the interest rate went to 24% and higher even.

Sometimes people think that they will make more money by borrowing but it has rarely been my experience except where the loan is to buy a productive asset. Running a business on overdraft or borrowing money from a stock agent to trade cattle can be a very attractive path to bankruptcy or at least a serious battle with the bank. The bank will treat the borrower taking out a loan like a prince, but if that borrower becomes a defaulter they can be mercilessly pursued like a pauper for recovery of the debt.

Paying the family
Far too often a family will run a business or farm and not draw out any money as their profit or “wages”. The owners need to draw a reasonable salary, but that should never create a loss. If the children are working, they need to be paid properly too but the same applies to losses. Profits are the source of money to live on, expansion, improvements and loan repayments. Losses are dangerous, a road to ruin, as the enterprise may be lost to foreclosure.

If the family is not properly paid for the work done, it can cause serious disagreement when retirement or sale is contemplated. That is the “crunch” time for many families. Sometimes the disputes end up in court absorbing much of an inheritance in legal fees, along with family friendships. GBAC promotes Profit as a Priority, for sustainability, security and family.

Succession Planning Pays
Preparing for succession to the business or farm pays off and not only in terms of the assets and income stream, but also in terms of family relationships. At GBAC we have seen brothers and sisters who will not speak to each other because of some perceived or real slight delivered by their parents in the division of family property. Call us if ever you feel that this has been neglected in your case and let us fix it. It is dynamite. The earlier a Succession Plan is developed the better. It can be modified as circumstances change over the years.

Succession also involves different values placed on assets, income and heritage. I had no problems selling the family cattle property that I had slaved 6 days a week on and off farm for 20 years, to pay off. Others feel terrible to have broken with tradition. Whatever your views it is wise to plan accordingly in a way that the plan will not be undone when you die. If there is one thing I have learned about Succession Planning, it is that you cannot determine what will happen after you die. My grandfather decided that he would exclude my mother and me from control of the family company he and my late father had run together. He left his controlling shares to outsiders. I had different ideas after his death and so applied my time, money and effort for many years to take total control for my mother, sisters and self. Boy did I learn fast! Lucky I had topped Australia in my corporate law subject.

Improvements
Fencing and machinery can be key farm profit-destroyers, as can fit-out and IT in a small business. I had three tractors on my 3,300 beef cattle property at the time I went to one of the “Grazing for Profit” courses Terry McCosker ran. He commented that on a purely grazing property “If you are crazy about machinery it is ok to have a wheelbarrow”. I sold the tractors when I returned from the course, which eliminated fuel and repairs. Then I stopped buying bulk fuel and bought it as needed from the pub or servo. Expenses plummeted and profits rose. I bought fencing when I needed it as opposed to buying in June to get tax deduction, used branches to prop up fallen fences and ran solar wires or tape in some places instead of new ring-lock, barb and plain. I did not lose any more stock than I had before.

When laying 2” poly pipe to pump water from a valley with a flowing creek to one where the creek ran dry I was given a very expensive option for burying about a kilometre of pipe, on the basis that the sun and weather would damage it otherwise. My wife and I opted to run it above ground ourselves and it lasted without trouble, protected by the feed that covered it in all but the driest times.

We all have different skills
Plenty of my neighbours knew much more about raising cattle than I ever would and were kind enough to share their knowledge with me. On the other hand my Chartered Accountancy background that had involved financial consulting to farms from just outside Canberra to the Kimberleys in WA, stood me in good stead when it came to making sure that the farm pumped profits out instead of absorbing cash like a sponge, as almost any farm or business will. The more we learn from others with different skills the better our annual profits will look. Just be happy to earn profits and pay taxes to help with roads, schools, hospitals and aged care. I had a senior partner in my young accounting days who promoted profits saying, “No matter how much tax there is on each extra dollar, there will be some left for you.” Make Profits your Priority and then get a good accountant who ensures you pay only what is required by the Tax Act.

Drought Ready Farming

Chartered Accountancy & Farming
I miss our farm down Braidwood way in the Southern Tablelands, but not the droughts. Drought at Tullamore in the NSW Central West with sheep was far worse than Braidwood of course. Being a 4^th generation farmer helped my Chartered Accountancy career embrace clients with farms and meatworks from one side of Australia to the other. Once we began to sort out bank farm loans and farm debt problems our client base spread from top of the country to the bottom. Few on the land are exempt from financial challenges in drought. In that sense I have been lucky that numbers are as much my game as pulling and marking calves or pressing wool bales.

Reluctantly I gave up farming to focus on the consultancy because it was impossible to do both. In the beginning I did a lot of travelling around farms in NSW. Then I found that the phone and fax enabled me to chat to farmers and negotiate with their banks quite easily from my farm or the city office. Today the internet, email, zoom etc makes it all so simple. Without my own livestock I can focus on helping other farmers deal with their finances. Finances are not foremost on most farmers’ minds like livestock or crops are, yet they are vital to survival. Drought affects farm loans, creditors, yields and cash management and that affects the farm and farming family.

Australia wide drought is devastating
It does not matter whether you are in FNQ, the Central West of NSW, Eire Peninsular, the WA Wheat belt, Tassie or the Top End, drought can bring very challenging money problems and many of the financial wizards, including bankers have no idea of what it is like on-farm in drought.

With drought a hot prospect this summer and fire an additional risk, at GBAC we are concentrating on setting up pre-drought financial strategies. That is similar to storing hay in the shed, grain in the silo and water in the dam. “Being Prepared” as the Scouts and Guides say, has a lot going for it. Robust financial models can help farmers choose their preferred drought strategies wisely with as few unpleasant surprises as possible. Knowing the likely financial outcome of each drought strategy goes a long way to prepare the bankers and calm them down if drought does strike and create havoc with the cashflow projections. Keeping bankers calm is just as productive as keeping livestock calm. Bank loans, farm mortgages, FDMs, creditor management, overdrafts and off farm work all need considering.

As a first step, Rural Financial Counsellors can be a great help, particularly with drought relief programs, forecasts and modelling.

All drought planning needs to help the farm survive and re-establish profitable production as soon as possible afterwards.

Feed, farm loans and FMDs
Drought is where those who have been able to save money in Farm Management Deposits receive a handsome pay-off. If they need to withdraw the money for stock feed the tax implications are near zero as the tax-deductible feed cost will offset the taxable withdrawal.

If on the other hand a farmer decides to sell down stock as pasture feed becomes scarcer the FMD can be used to squirrel away the proceeds of sale so that they can be used to re-stock when the feed recovers post-drought, that is ideal. The difficulty is that, for those who do not de-stock hard enough to get through without buying in feed, the sale proceeds from de-stocking can disappear on feed for the stock that remain. Then bank debt is used to buy in stock.

That can create a disaster for future decades. It is therefore a decision that is best discussed with a farm finance consultant well separated from the banks or other moneylenders. Whereas the bank manager used to be the source of trusted and helpful financial advice, the situation is quite the opposite now. The big banks don’t make billions and pay multi-million-dollar salaries through discouraging inappropriate borrowing. They make it by telling customers all of the benefits of loans without explaining any of the disadvantages. It is that desire to ensure no conflict of interest exists, that keeps GBAC away from any relationships with bankers except to investigate their conduct in relation to our clients and negotiate hard with them for compensation style debt solutions when they have misled clients into unaffordable debt, like failing to take fire flood and drought, commodity prices and government policy into account when offering loans.

Debt rescue
When called in to rescue farmers from unscrupulous bankers who fail to allow for extreme seasonal factors in debt management, we frequently find that the problems began in the aftermath of a fire, flood or drought. All of the major banks have operated in Australia for long enough to know that these are occupational hazards common in farming.

What we often see is the bankers encouraging farmers into long term debt increases, whereas what they need is to get rid of debt altogether. Cash management and debt management should be seen as essential elements of any long-term debt rescue exercise. Naturally enough most farmers in trouble look for an immediate increase in debt. Sometimes that is justifiable, but in most cases the immediate priority should be to reduce debt. That can involve difficult and unpleasant decisions. We all enjoy adding another block to the farm but abhor the idea of selling off a block to clear debt. When we do take that decision it needs to be part of a plan to clear debt completely and recover the title deeds then give loan farming a big miss. Cash management and debt management should be as much a part of any farm enterprise as paddock, stock, disease, pest and fence management.

The object of a farm should be to make as much profit as it can. Don’t be guided by the tax agent accountant who proudly shows you your figures that declare you will not contribute tax to the nation’s services like roads, health and education because you have lost money. Farmers need profit to get out of debt without selling off blocks, so don’t begrudge the government a bit of tax. It is important to find out all the ways to get out of debt. Savings, sale of land, bank debt write-offs and annual profits are key ways to do it. Within each of those there are many factors to consider.

Sometimes we feel that we want to have good looking fences, gates, yards, homes, front paddocks vehicles and livestock. The best way to get them is to run the farm lean and earn substantial profits, make sure only the necessary amount of tax is paid and save the rest. After five or ten years like that most farmers will have accumulated enough profits to improve their yards, fences, home and vehicle without going into debt. The stock will all be looking pretty good too. There is nothing like debt-free farming without the bank on your back taking the first share of everything you earn. I spent 20 years paying off my place at Braidwood and the next decade was pure bliss.

The impact of weather

Weather affects many businesses but it has a huge, unpredictable impact on the ability of a farmer to make loan repayments. Sadly, banks often ignore it when signing up farmers to a farm loan. Bankers focus on boosting bank profits. Whether it is a wheat crop or a lambing, bad weather can change a farm’s profit for the year. Lambs can die and a crop can be decimated by bad weather.

Good Banking

As a 4^th generation sheep and cattle breeder himself, Greg Bloomfield knows just how that works. That is why farmers all over Australia trust Greg and his Good Banking Agribusiness Consultancy to help them obtain the right sort of loan to cope with bad weather. They also know he will if necessary, with his Chartered Accountancy background, help them if that farm loan becomes the subject of a farm debt mediation or foreclosure.

Borrow Better
GBAC suggests that farmers carefully think through the implications of bad weather on their farm loans before signing up with the bank. Its Borrow Better facility enables primary producers to see what sort of farm loans are on offer from a number of banks in the same way that they might see what sort of sheep or cattle are on offer at the saleyards. That is really the only way to ensure that the loan contract recognises from the start that weather can have a beneficial or detrimental impact on farm loan repayments.

Escaping from the debt trap

What to do if your bank has you trapped in a high priced home, business or farm mortgage that may become more expensive, putting your home at risk through default. By law I can’t tell home-buyers or other consumers for a fee, so I’ll tell you for free.

1 How did it happen
Banks and other lenders knew interest rates would probably rise from historic lows. By offering cheap mortgages for very expensive housing as well as for businesses and farms, they knew that as rates rose buyers would be trapped in unaffordable mortgage debt. Then they could nurse the borrowers along like pet rabbits destined for stew.

The interest they earn will grow with rate rises to give huge returns. Borrowers will slave away to meet repayments. Unmet interest can be added to the debt to earn more interest. If after a decade the debt gets close to the home value, the lenders can move in and sell the borrower up, absorbing the difference between debt and sale value by unbelievably high foreclosure charges.

Escape
On Monday I will start explaining the best options for borrowers to escape this carefully laid trap.