The Advance Payments Program is a loan-based program that allows you to access up to $1 million per program year, based on the eligible commodities you are farming.
The program provides a low interest advance whereby the federal government pays the interest on the first $100,000 of your advance.
These advances are offered to provide a cushion with a cash payment to help with financial needs until you can sell your products.
The program provides the flexibility of selling your products based on the market conditions and when it is right for you, instead of being pressured to sell because you need to make ends meet.
The advances are short-term. You have 18 months to fully repay the advance for most commodities (cattle and bison are provided 24-month terms). Given the nature of the advances being reliant on the agricultural products you are selling, the advance is secured by the products for which it is approved.
To be eligible, you must be a Canadian citizen or permanent resident, or a corporation, co-operative or partnership of which majority interest is held by a Canadian citizen or permanent resident. You must also be the age of majority in your province and producing your own product and responsible for your own marketing.
Numerous producer organizations act as administrators for the Advance Payments Program, such as the Alberta Wheat Commission, the Manitoba Crop Alliance and the Canadian Canola Growers Association. APP administrators have varying available advances, fees and interest rates, so it is best to do a bit of research to find which APP administrator is best for you.
Once you find a suitable APP administrator, you can submit your application along with the required documentation. Following this, you will be assessed and will be notified of the results. If your application is successful, you need to sign a repayment agreement and your APP administrator will send you a cheque for your approved advance.
Repayments occur with the sale of the agricultural product and within the timeline set out in the agreement.
With the changes we have seen over the year and are continuing to see with long-lasting effects, having options is essential for development and growth in the market.
Colin Miller is a Chartered Professional Accountant and Partner in KPMG’s Tax practice in Lethbridge. He can be reached at (403) 380 – 5700 or by email at firstname.lastname@example.org. He would like to thank Marden Litchfield and Kirana Stocker of KPMG for their assistance with writing this article.