Agriculture Loan and Loan Guarantees
The Department of Agriculture, Aquaculture and Fisheries provides repayable loans and loan guarantees to promote development of the agriculture sector. New entrants, defined as someone who has owned a farm for five years or less, are eligible for lower interest rates and equity requirements.
Eligible activities include:
• Purchase an existing farm
• Start a new farm
• Purchase shares in a farming operation
• Purchase land for farming
• Develop land for farming
• Working capital requirements
Refinancing or repaying debt is not an eligible activity for a loan or loan guarantee.
Applications must include a business plan which includes the following:
• Description of business and project;
• Financial information – minimum of three years of projected income statements and cash flow statements and previous three years financial statements or income tax returns (if existing operation);
• Description of management plan (how business will be operated) and management’s qualifications including education and work experience;
• Marketing plan (to whom and how products will be sold); and
• Productions details (three year historical summary of actuals and three year summary of projected production including assumptions).
Acceptable security must be provided for the loan or loan guarantee.
The applicant must demonstrate a minimum 10% (new entrants 5%) equity into the project. The department may require a higher equity level based on the risk of the project.
There is no application fee to apply for a loan or loan guarantee.
The Interest rate for loans to new entrants is the provincial interest rate on loans plus one percent.
The interest rate for all other loans are determined by the term of the loan, amount borrowed and equity contributed to the project.
Repayment terms are matched to the cash flow of the project as supported by the business plan. Options include interest only payments or principal and interest payments.
A loan guarantee fee of 1.5% of the amount guaranteed is payable at the beginning of each year the guarantee is in place.