By Gary Sliworsky, Ag and rural rep
The Canadian Agricultural Loans Act (CALA) is a loan guarantee program which provides loans to farmers and agricultural co-operatives.
Existing farmers, beginning/start-up farmers (i.e. less than six years of farming), farmers taking over the family farm , and agricultural co-operatives with a majority (50 percent plus one) farmer membership may apply.
If a purchase has already been made, a farmer has 60 days to receive funding from a lender for a CALA loan. A beginning or start-up farmer should be prepared to provide the lender with a business plan and/or an income tax form showing no farm income and/or expenses at least once in the last six years.
Agricultural co-operatives will need to be prepared to provide a current income tax return showing farm income and/or expenses from 50 percent plus one of its members or a notarized attestation as to their membership.
The following financial institutions offer loans under the CALA: Chartered banks trust companies, loan companies, credit unions, insurance companies, other designated organizations. The farmer must pay a fee to have the loan registered and guaranteed under the CALA. This fee is 0.85 percent of the amount of the loan. The lender may also charge an administration fee of 0.25 percent of the amount of the loan up to a maximum of $250.
Eligible loan purposes include the following that must be used in the applicant’s farming operation: Equipment, building/ construction, land, livestock, and shares in a farming operation.
The maximum loan is: $500,000 for land and the construction or improvement of buildings, $350,000 for all other loan purposes.
The maximum aggregate loan limit for any one borrower is $500,000. The maximum aggregate loan limit for agricultural cooperatives is $3 million, with the Minister’s approval.
The maximum term for loans is 10 years, with 15 years for loans on land purchases.
Interest to be paid on a floating rate is the lender’s prime rate plus a maximum of one percent. Interest to be paid on a fixed-term rate uses a formula based on the lender’s residential mortgage rate plus a maximum of one percent.
For more information: contact your financial institution, e-mail CALA at email@example.com, call the CALA toll-free line at 1-888-346-2511 or visit the CALA website at www.agr.gc.ca/cala
Dates to remember
•Aug. 13-15—Rainy River Valley Agricultural Fair, Emo
•Aug. 22—Cattle sale, Stratton Sales Yard, 9:30 am start.