The 2026 Ag Lending Crisis: What the Banks Aren’t Telling You

Farmer Mac recently released its 2025 Agricultural Lenders Survey Results. On the surface, it’s a collection of data points and industry outlooks. But if you’ve been in the bank (like our team has), you know how to read between the lines.

The reality for the American farmer in 2026 is that the banks are already preparing for a "year of reckoning." They are thinking 12, 24, and 36 months ahead while most producers are just trying to get through the next week.

Here is the truth about the 2025 survey and—more importantly—what it means for your family’s legacy.

1. The Tax Return Trap

The survey shows that lender expectations for farm profitability have dipped below 50% for the first time since 2020. Lenders use tax returns to gauge this, but here is the secret: Your tax return is the absolute worst document to use to gauge your operation’s health.

As a banker, we checked the box that we received your tax return to satisfy the IRS, but we used our internal systems to see if you were actually making money. Most producers manipulate their taxes to minimize what they pay Uncle Sam. If you are using that same document to manage your business, you are flying blind.

2. Working Capital: The Lifeblood of Leverage

Lenders remain fixated on working capital. Why? Because working capital is what pays their debt back.

Over the last few years, high input costs have been bleeding working capital dry. Once you lose your liquid position, you lose your say in the future of your operation. At Legacy Farmer, this is the first foundational piece we fix. Without working capital, the bank holds all the cards.

The Reality Check: In "good years," banks lend based on the equity in your balance sheet. In "bad years," they only care about cash flow. You have a responsibility to ensure your operation works on both documents, regardless of what the market is doing.

3. Relationship Capital vs. Interest Rates

The survey highlights "interest rate volatility" as a top concern. While everyone is chasing a 50-100 basis point discount, they are sacrificing relationship capital.

Agriculture is tough 7 out of every 10 years. In those tough years, you don't need a slightly lower rate; you need a lender who has your back and understands your operation. Don't trade a 15-year relationship for a teaser rate from a bank that will foreclose the second things get "messy."

4. The 36-Month Gap: How Banks Play the Game

One of the most telling takeaways is that lenders expect credit quality to deteriorate further over the next 12 months.

Here is the difference between an average producer and a "Full-Stacked" business owner:

• The Average Producer: Thinks in terms of weeks, months, or the next season.
• The Bank: Is already making decisions today to protect their assets 36 months down the road.

The bank sees the writing on the wall for 2026 and 2027. They are tightening underwriting and loan terms right now to protect themselves. If you aren't expanding your time horizon and creating a 3-year strategy, you are already behind.

5. The Land Grab: Why Approval Rates Stay High

The survey shows loan approval rates are expected to rise to 88%. This isn't because the industry is healthy—it’s because the banks are "in too deep."

Banks are hesitant to be "the guy in town" who foreclosed on a multi-generational family farm. Instead, they will ride it out until the breaking point. They want your real estate as collateral because it’s a high store of value that is easy for them to sell.

Pro-Tip: If your bank is using your family’s ground to secure a risky operating line, you should be negotiating for a massive discount on your interest rate. You are providing them with the safest collateral possible; make sure you are being compensated for that risk.

The Path to Financial Certainty

Lenders are expecting an increase in farmland sales in 2026 because they know producers are running out of leverage. Between 2017 and 2024, 160,000 family farms went out of business. That is 24 million acres of legacy that vanished because of a lack of strategy.

You don't have to be a statistic. The difference between the operations that thrive and those that disappear comes down to three things:

1. Structure: Moving numbers out of your head and into a system.
2. Organization: Knowing where every dollar goes.
3. Strategy: Thinking 24-36 months ahead, just like the bank does.

Stop Guessing. Start Leading.

At Legacy Farmer, we help you become a "Full-Stacked" business owner with the clarity and power to look your banker in the eye and dictate your own terms.

Are you ready to build a fortress around your legacy?