Eligible farmers under age 40 will be able to get larger loans for less of a down payment through an expansion of Farm Credit Canada’s Young Farmer Loan plan.
The federal farm lending agency on Wednesday announced the program’s credit limit per applicant will be doubled to $1 million, with a minimum down payment of 20 per cent of the value of the loan, down from 25 per cent previously.
A Young Farmer Loan is meant to support the “purchase or improvement of farmland and buildings” and to help farmers establish their operations and build a credit history with FCC.
The loan program will continue to offer a variable lending rate at prime plus 0.5 per cent, or a “special fixed rate,” with no loan processing fees charged.
“Changes to the Young Farmer Loan recognize the rising cost for young farmers to become established in the industry,” FCC CEO Michael Hoffort said in Wednesday’s release.
The loan program, launched in 2012, was meant to address the needs of the age-18-to-39 demographic, which, during the 2006 federal Census, made up about 16 per cent of Canadian producers.
FCC had set aside $500 million for loans through the program in its first year. It boosted that commitment to $1 billion in 2013, $1.5 billion in 2014 and to $2 billion in March this year.
At the end of 2015, the program had approved almost 6,000 loans worth over $1.3 billion.
The loan program “fills a gap in the marketplace by enabling young farmers to access the credit they need to get started and grow in the industry,” FCC said Wednesday.
“Young farmers tell me about their concerns and aspirations for their future in the agriculture sector, and access to capital is definitely one,” federal Agriculture Minister Lawrence MacAulay said in FCC’s release.
“Doubling the amount of credit available to young farmers helps them to successfully make their careers in agriculture.”
“Access to capital through fair and flexible financing helps ensure a smooth and successful transition for the next generation of farmer,” Ron Bonnett, president of the Canadian Federation of Agriculture, said in the same release. — AGCanada.com Network