Canadian beginning farmers and agricultural marketing co-operatives with a minority of non-farmer members will be able to apply for loans under the newly expanded government loan guarantee program as early as this week.
Before Parliament adjourned for the summer, senators approved the Canadian Agricultural Loans Act that could send as much as $1 billion of government-guaranteed credit into the farm economy over the next five years.
It was proclaimed into law June 18.
“The long and the short of it is that the banks and credit unions familiar with the details of the program can start making it available when they want,” said Greg Meredith, assistant deputy minister for farm financial programs in Agriculture Canada. “They can start offering these loans immediately.”
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Ottawa will advertise the details of the program over the summer.
John Anderson, director of government affairs for the Canadian Co-operative Association, said the new program will serve co-ops much better than the old Farm Improvement and Marketing Co-operatives Loans Act that it replaces.
Under FIMCLA, only agricultural marketing co-ops 100 percent owned by farmers were eligible for loans. The new program allows co-ops with as little as 50 percent plus one farm membership to borrow up to $3 million.
“I think there will be a much better co-op take up,” said Anderson. “It gives co-operatives much more flexibility to bring in partners to help launch necessary projects.”
The new program for the first time also will make loans of up to $500,000 available to younger farmers taking over the family farm.
And it doubles the amount of loan available to farmers to $500,000 from the former $250,000 limit.
Meredith said the department expects most of the 3,400 new farmers who enter the business each year to take advantage of the program.
He said the $1 billion estimate of government-guaranteed loans over five years is not a limit or a target. It is a government estimate of the increased use of the program.
“If demand turns out to be more, that’s fine,” he said.
Financial institutions make the loans. Ottawa guarantees them, eliminating the risk to lenders.
