What is Canadian Agriculture Loans Act?

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What This Program Offers

A loan guarantee scheme called the Canadian Agricultural Loans Act (CALA) Program was created to boost the number of loans available to farmers and agricultural cooperatives. Farmers can use these loans to start, develop, and enhance their farms, and agricultural cooperatives can also use them to process, distribute, or market their produce.

Objectives

Through the CALA Program, we help the agriculture industry revitalise while empowering cooperatives to utilise market opportunities better.

Available Resources

The federal government guarantees a payback to the lender of 95% of a net loss on an eligible loan provided under the CALA.

For any one farm enterprise, the total loan ceiling cannot exceed $500,000.

Loans are only permitted up to:

• A total of $50000 will be used to buy land and build or upgrade buildings.
• $350,000 for any further loan requirements, such as refinancing or consolidation.
• With the Minister’s consent, agricultural cooperatives may borrow up to $3 million in total.

As an illustration, if a farmer receives a CALA loan for $300,000 to buy a tractor, he can still access up to $200,000 to buy land or repair buildings, or $50,000 to buy another implement and $150,000 to buy land or repair buildings.

Programme Execution

Loans are issued and managed by lenders under the CALA programme, including banks, credit unions, and caisses populaires.

When making CALA loans, lenders must exercise the same caution and wisdom they would when making regular loans. The government guarantee on qualified loans to farmers and agricultural cooperatives is provided by the CALA Program, which has been intended to allow lenders to include it into their typical lending practices.

A lender has 60 days starting from the purchase date to offer a CALA loan if a purchase has already been made.

Lenders can register loans using the CALA Online Loan Registration System and send the required registration fee.

Administrative Regulations

The CALA programme is managed using the following.

• Agricultural Loans Act of Canada
• Regulations for Canadian Agricultural Loans
• Guidelines for Lenders: Instructions for lenders managing CALA loans
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Eligibility

If you fit any of the following criteria, you may apply:

• current farmers
• first-time farmers (that is, less than 6 years of farming)
• beginning farmers
• farming cooperatives with a majority (50% + 1) farmers taking over the family farm part-time farmers farmer participation
• starting, starting up Farmers can be required to give the lender a business plan and an income tax form that demonstrates they have not had any farm income or expenses for at least one year in the previous six years.

A notarized attestation of membership or a current income tax return with farm revenue and/or expense from 50% + 1 of its members may be required of agricultural cooperatives.

A agricultural enterprise must adhere to the Canadian Agricultural Loans Act’s definitions of farming and farmer.

Farmer: Any of the following who is now involved in or plans to begin farming in Canada.

• a single person, a partnership, a company, or a cooperative association
• Producing cultivated and uncultivated field crops as well as horticulture crops is called farming.
  raising animals for food, fur, and other purposes
• the growing of crops for feed and the production of eggs, milk, honey, maple syrup, tobacco, fibre, and wood from woodlots
• the creation or care of any other object or animal that is prohibited

Eligible Objectives

The following goals are permissible under the Act.

Real estate objectives:

• acquisition of land
• Building or structure additions, repairs, alterations, or construction on a farm
• Purchase, transportation to, installation on, and completion of completed or nearly completed structures on a farm, as needed.

Other borrowing goals:

• Equipment of any kind, whether or not it is typically attached to real estate or other movable property, including tools, implements, machines, and equipment for the generation or distribution of electricity, whether or not it is attached to real estate or other movable property, purchase, installation, alteration, major overhaul, or major repair to/of.
• Purchase of breeding animals that will help a farm operation in the long run, such as horses and other equines, cattle, sheep, goats, and other ruminants, as well as swine, poultry, bees, and animals that produce fur.
  fence installation, construction, or drainage improvements
• Land clearing, dividing, irrigating, and reclaiming
  the planting of trees and the use of shelter belts can save soil and stop soil erosion.
• Fencing that needs repair or replacement and costs $2,000 or more
• Purchase and planting of ginseng, fruit trees, Christmas trees, and trees for the manufacture of syrup, all of which cost $2,000 or more.
  building a driveway or road on a farm
• Tax on land transfers, fees for surveys, appraisals, and legal fees associated with the acquisition of additional land
  purchase of shares for farm transfers among generations
  Loan consolidation and refinancing

Ineligible objectives

According to the Act, the following purposes are prohibited:

• Upgrades to the family’s home
• Purchasing quotas of any type
• Operating loans and loans for purchasing temporary feeder animals
• Combining a lender’s regular loans
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How to Apply?

To apply for a loan under the CALA programme, kindly go to any of the lending institutions listed below:

• licenced banks
• credit unions, popular banks
• any other business that the Minister designates, including the Alberta Treasury Branch

A loan under the CALA programme can be one of the financing options the lender decides is ideal for your needs after going through its loan application procedure.

Loan information

The maximum rate of interest

• The maximum interest rate payable on a floating rate is the lender’s prime rate + 1%.
• The maximum interest rate on a fixed term rate is the lender’s home mortgage rate for a similar duration + 1%.

Payment conditions

Maximum repayment terms are as follows:

• 15 years for buying land. If a balloon payment is planned for the loan after the 15 years, lenders are permitted to amortise loans for more than 15 years. The leftover loan balance might be refinanced for an additional 10 years under the Canadian Agricultural Loans Act (CALA).
• For all other purposes, ten years.

Fees

The registration cost is equal to 0.85% of the loan amount. When registering a loan, this fee must be given to the “Receiver General for Canada.”

The lender may also impose an administration fee. The administration charge is limited to 0.25 percent of the loan balance (up to a maximum of $250) for loans under $250,000. The administrative charge is set at 0.1% of the loan amount for loans over $250,000.

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