New product FCC pledges $500 million for loans of up to $500,000 to farmers under 40
Canadian farmers up to age 30-something are being offered loans to help them improve their operations by buying or upgrading land or farm buildings.
Farm Credit Canada and the federal government have rolled out a new Young Farmer Loan product, featuring variable rates at prime plus 0.5 per cent, plus no loan processing fees. “Special fixed rates” are also available.
“Qualified producers” under 40 years of age can get loans of up to $500,000 through FCC through this program, budgeted for up to $500 million, the federal ag lending agency said.
The loans must go toward the purchase of agriculture-related assets, FCC said. “Even if you have limited credit experience, by putting together a sound plan, you can purchase farm-related assets.”
The loans, “normally secured with real property,” can be repaid in monthly, quarterly, semi-annual or annual payments, FCC said.
The loan’s features and options were expected 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.
Ag groups hailing FCC’s announcement included Dairy Farmers of Canada, noting the farmers in its sector are “generally younger,” with an average age of 47 in 2006 compared to the average age of 52 across all Canadian ag sectors.
Canadian Cattlemen’s Association president Martin Unrau said in a separate release that financing is one of the biggest obstacles facing young farmers in startup or expansion mode.
“There are plenty of young people who love agriculture and want to start their own business, but just can’t make the numbers work,” said Unrau, who farms at MacGregor, Man.
“By allowing young producers to borrow with no fees at affordable rates, the Young Farmer Loan will help them build their businesses and develop a solid credit history,” FCC CEO Greg Stewart said in the lender’s release.