For farmers and agricultural co-operatives, the CALA Program provides access to guarantee programs that make loans more readily available. These loans can go toward establishing, improving, and developing farms, and agricultural co-operatives can also use the funding for processing, distribution and/or marketing of farming products.
The purpose of this program is to support the agricultural sector in its renewal and facilitating co-operative attainment of market opportunities.
According to the terms of the CALA, the Canadian government guarantees repayment of 95 per cent of a net loss to the lender.
No farm operation may take out more than an aggregate loan total of $500,000. For land purchase and building construction or improvement, the cap is $500,000; for all other purposes, including refinancing and debt consolidation, the cap is $350,000.
For agricultural co-operatives, the aggregate loan limit is $3 million.
Lenders, such as credit unions, caisses populaires and banks distribute and administer loans through this program.
Lenders must exercise the same care and diligence with CALA loans as they would for any other loans. This program enables lenders to work it in with their ongoing lending practice.
If a purchase has already taken place, the lender as 60 days from the purchase date to provide a CALA loan. They can register the loans and submit the associated fees for registration with the CALA Online Loan Registration System.
Are You Eligible?
The following individuals and entities may apply:
- Beginning farmers (no more than six years of farming)
- Start-up farmers
- Existing farmers
- Farmers moving in to manage the family farm
- Part-time farmers
- Agricultural co-operatives with farmers as a majority membership (50% + 1)
Start-up and beginning farmers must provide the lender a business plan and income tax paperwork showing no farm income and/or expenses for a minimum of one year out of the last six.
Agricultural co-operatives may be required to submit a current tax return demonstrating farm income and/or expense from its members or a notarized document attesting to the co-operative’s membership.
Farm operations must satisfy the definitions of “farmer” and “farming” as defined in the terms of CALA.
A farmer may be an individual, partnership, corporation or co-operative association that is or intends to engage in farming in Canada.
Farming consists of:
- Producing field-grown crops and horticultural crops
- Raising poultry, fur-bearing animals and/or livestock
- Producing eggs, honey, tobacco, wood from lots, fodder crops, fiber, maple syrup and/or milk
- Producing or raising any other animal or prescribed thing.
The loan may fund the following purposes:
Real property purposes
- Land purchases
- Construction, repair, alteration, or addition to any structure or building on a farm
- Purchase, movement, and installation of structures and, when necessary, completion of those structures, on a farm.
- Purchase, alteration, installation, or major overhaul/repair to machinery and apparatus for generating or distributing electricity; or implements, machines and other apparatus not typically fixed to property
- Purchase of breeding livestock to bring long-term improvement to a farming operation
- Construction or erection of fencing or drainage works
- Clearing, irrigating, reclaiming and/or breaking of land
- Conserving soil or preventing soil erosion through tree planting and shelter belts
- Repairing/overhauling fencing for a cost of at least $2,000
- Purchasing and planting trees for syrup production, fruit cultivation, ginseng cultivation or Christmas trees, for a cost of at least $2,000
- Construction of a farm driveway or road
- Purchasing shares for farm transfers from one generation to another
- Refinancing or consolidation of loans
- Family dwelling improvements
- Consolidation of ordinary loans
- Operating loans or loans for short term feeder livestock purchases
- Quota purchases
A visit to the following organizations can help you apply:
- Credit unions
- Chartered banks
- Caisses populaires
- Alberta Treasury Branches
- Other organizations designated by the Minister
The interest on the loan is paid on a floating rate, maxes out at the lender’s prime rate plus 1 per cent.
If the loan is on a fixed term rate, the maximum interest rate is the lender’s residential mortgage interest rate for a like term plus 1 per cent.
The maximum repayment term is 15 years for land purchases. The amortization can extend longer and financed with CALA for another ten years. For all other purposes, the maximum term is 10 years.
The registration fee is 0.85 percent of the loan amount. This fee is remitted to the Receiver General for Canada upon loan registration. Lenders may also charge an administrative fee, capped at 0.25 per cent of the loan amount for loans up to $250,000, with a max fee of $250. For loans greater than $250,000, the administration fee has a cap of 0.1 per cent of the loan amount.
Amansad Financial does not specialize, does not offer, and does not assist with CALA loans. However, for farms and agricultural co-operatives who cannot find loans through this program, we may be able to refer you to qualifying institutions. We also provide alternative private mortgages within our network of private lender partners.