The Canadian Agricultural Loans Act (CALA) program is a loan program that is in part guaranteed by the federal government. The CALA program builds on and replaces the previous Farm Improvement and Marketing Co-operative Loans Act (FIMCLA) program.
New and existing farmers can use CALA to finance a wide variety of capital improvements or for purchases to build and improve their farms; while Agricultural co-operatives may use loans to process, market and distribute farming products.(1)
Canadian Agricultural Loans Act (CALA) program key benefits:
- Enjoy a preferred interest rate, if you qualify under the Canadian Agricultural Loans Act (CALA) program
- Choose either a variable or a fixed interest rate
- Take advantage of a maximum interest rate set at the Bank's prime rate(3) plus 1%, with the variable rate option, or,
- Take advantage of a fixed interest rate option that may be selected from a one to five year term. The maximum rate is CIBC's residential mortgage rate plus 1%
- May qualify for borrowing with a minimum of 20% equity or 10% equity for beginning farmers on specific assets
- CIBC Farm Credit Life Insurance(2) also helps provides you and your family with protection from financial hardship if something were to happen to you
Information you need to know:
Farmers eligible for a CALA loan guarantee include:
- Existing farmers
- Beginning/start-up farmers (i.e. less than six years of farming)
- Farmers taking over the family farm
- Agricultural co-operatives with a majority (50% + 1) farmer membership
Loans can be used to:
- Finance the installation or repairing of farm equipment and machinery; make improvements to farm buildings or structures; purchase additional farmland and related costs; purchase breeding stock, etc.
- Finance the inter-generational transfer of farms to help young farmers take over the family farm
CALA loans are limited to a maximum of:
- $500,000 for land and the construction or improvement of buildings
- $350,000 for all other loan purposes
An applicant may have one or more loans at any one time, but the total of loans issued under the CALA program cannot exceed the maximum limit of $500,000. The maximum aggregate loan limit for agricultural co-operatives is $3 million, with approval from the Minister of Agriculture and Agri-Food.
The maximum term over which you can repay a CALA loan is 15 years if the funds are used to purchase additional farmland and 10 years for other purchases or improvements. Maximum loan terms for loans to co-operatives for the processing, distribution or marketing of farm products remains at 20 years for real property and 10 years for all other purposes.
Variable interest rate option: You can pay the principal in monthly, quarterly, semi-annual or annual installments, depending on your farm business cycle. Generally, interest rates are considered an operating cost and are paid monthly.
Fixed interest rate option: Repayment may be arranged on a "principal plus interest" basis or on a blended "principal and interest" basis. Payments can be made monthly, quarterly, semi-annually or annually, depending on your farm business cycle. Unless the payment is "blended", interest costs will generally be paid monthly.
Normally the asset being purchased or improved is used as security for the loan. You may have one or more loans under the CALA program at any one time. However, the combined total owing cannot exceed $500,000.
To apply or get more information about CIBC Farm Loans, contact a CIBC Agriculture Banking Specialist, or visit a CIBC branch.