Canadian Agricultural Loans Act (CALA) Program
The Canadian Agricultural Loans Act (CALA) Program is a loan guarantee program designed to increase the availability of loans to farmers and agricultural co-operatives. Farmers can use an agriculture loan to establish, improve, and develop farms, while agricultural co-operatives may also access loans to process, distribute, or market the products of farming.
Offered by Agriculture and Agri-Food Canada (AAFC)
Amount
Federal government guarantees to the lender repayment of 95% of a net loss on an eligible loan; maximum aggregate loan limit of $500,000 per farm operation ($3 million for agricultural co-operatives, with Ministerial approval); loans limited to $500,000 for land and buildings and $350,000 for all other purposes
Quick eligibility check
Who can apply
You must meet all of the following criteria to be eligible for this government farm loan.
- You're one of the following:
- existing farmer
- beginning farmer (less than 6 years of farming)
- start-up agribusiness
- farmer taking over the family farm
- part-time farmer
- agricultural co-operatives with a majority (50% + 1) farmer membership
- Your farm operation must meet the definition of "farmer" and "farming" as defined by the Canadian Agricultural Loans Act (the Act).
You need to meet all the eligibility criteria to qualify for the program.
If you meet all the eligibility criteria, you may qualify for the program.
Farmer refers to one of the following that is, or intends to be, engaged in farming in Canada:
- an individual
- a partnership
- a corporation
- a co-operative association
Farming refers to:
- the production of field-grown crops, cultivated and uncultivated, and horticultural crops
- the raising of livestock, poultry, and fur-bearing animals
- the production of eggs, milk, honey, maple syrup, tobacco, fibres, wood from woodlots, and fodder crops
- the production or raising of any other prescribed thing or animal
To qualify for a CALA Program loan, both the applicant and loan purpose must meet the eligibility criteria defined in the Act. Applicants must be farmers engaged or intending to engage in farming in Canada. Part-time farmers are also eligible.
Loans are limited to establishing, maintaining, or improving a farming enterprise, or for processing, distributing, or marketing farm products by a co-operative association. Assets financed with a CALA Program loan must be used within the farming enterprise.
Owner
For a loan related to an item that forms part of, or is affixed to, real or immovable property, the borrower must own the property. For a loan related to an item that does not form part of, or is not affixed to, real or immovable property, the borrower must own the item outright or have purchased it under a conditional sales contract.
Tenant
A loan may be granted to an eligible farmer who leases land. If the loan is for items that are affixed to the leased property, the farmer must have a leasehold interest in the property that extends at least 2 years beyond the repayment term of the loan.
Note:
Only tenant farmers with a separate and distinct land base or commercial lease from other tenant farmers for their farming operation are eligible as tenant farmers. Sub-divisions of the same land base and farming business integrated franchises are not eligible.
About the funding
Under this farm financing program, the federal government guarantees, to the lender, repayment of 95% of a net loss on an eligible loan issued.
The maximum aggregate loan limit for any one farm operation is $500,000.
The maximum aggregate loan limit for agricultural co-operatives is $3 million, with approval from the Minister of Agriculture and Agri-Food.
Loans are limited to a maximum of:
Show all funding details
- $500,000 for the purchase of land and the construction or improvement of buildings
- $350,000 for all other loan purposes, including consolidation/refinancing
Example of a CALA Program loan
If you get a CALA Program loan for $300,000 for a tractor, you can still access up to $200,000 for land purchase or building repair. Alternatively, you could borrow $50,000 for another implement and $150,000 for land purchase or building repair.
Maximum interest rates
Interest to be paid on a floating rate is a maximum of the lender's prime rate plus 1%.
Interest to be paid on a fixed term rate is a maximum of the lender's residential mortgage rate, for a comparable term, plus 1%.
Repayment terms
The maximum repayment terms are:
- 15 years for land purchases
- Lenders may amortize loans for longer than 15 years provided a balloon payment is scheduled for the loan at the end of the 15-year period
- 10 years for all other purposes
Fees The registration fee is 0.85% of the amount of the loan. This fee must be submitted at the time of loan registration. An administration fee may also be charged by the lender.
- For loans up to $250,000, the administration fee is capped at 0.25% of the amount of the loan (to a maximum of $250)
- For loans over $250,000, the administration fee is capped at 0.1% of the amount of the loan
3.1 Existing farmers
Loans to existing farmers must not exceed the lesser of 80% of the appraised value of the property for which the loan was made or the purchase price as evidenced by, for example, an invoice, a deed of sale, or a purchase contract.
3.2 Beginning farmers
Loans to beginning farmers must not exceed the lesser of 90% of the appraised value of the property for which the loan was made or the purchase price as evidenced by, for example, an invoice, a deed of sale, or a purchase contract.
The registration fees and lender’s charges do not need to be considered in determining the limit regarding the 80% or 90% rule.
Your farming purpose(s) must be eligible under the Act.
The following are examples of eligible loan purposes.
The following list of eligible loan purposes is not exhaustive; it illustrates some items found in the Act or Regulations (others have been determined to be eligible through policy decisions rendered by AAFC).
Real property purposes:
- purchase of land
- construction, repair, alteration of, or additions to, any building or structure on a farm
- purchase of, movement to, or installation of complete or partially complete structures including any necessary completion of the installed structures
Other purposes:
- purchase, installation, alteration, major overhaul, or major repair to or of:
- tools, implements, apparatus and machines of any kind not usually affixed to real or immovable property
- machinery and apparatus for the generation or distribution of electricity, whether they are affixed or not affixed to real or immovable property
- purchase of livestock including:
- horses and other equines
- cattle, sheep, goats and other ruminants
- swine, poultry, bees and fur bearing animals
- any other prescribed animal such as game birds, ostrich, emu and rhea
- erection or construction of fencing or works for drainage
- clearing, breaking, irrigating and reclaiming of land
- planting of trees and shelter belts to prevent soil corrosion and erosion
- repair or overhaul of fencing where the cost is $2,000 or more
- purchase and the planting of fruit trees, Christmas trees, ginseng, and maple trees for maple syrup production, and the purchase and planting of fruit trees, Christmas trees, and ginseng, where the cost is $2,000 or more
- construction of a road or driveway on a farm
- transfer tax, survey, appraisal and legal costs relating to the purchase of land
- consolidation or refinancing of loans under the CALA Program, including:
- loans originally granted by the lending institution where the loans were first issued
- loans issued by a third party, provided they were initially made for purposes eligible under the CALA Program
- purchase of shares for inter-generational farm transfers (refer to section 5.8 of these guidelines)
- purchase of a crop storage condominium
- the cost of obtaining security on existing assets, including premiums for life and/or disability insurance
- the costs of a fee or charge (refer to section 17 of the Regulations)
- purchase of a refrigerated truck or a mobile abattoir
- the purchase of equipment to process farm products into energy (for example, a biodigester)
- cannabis production
- vertical farming
- leasehold improvements
- land improvements
Note:
Regarding eligible forestry purposes under the CALA Program, farming includes the production of wood from woodlots. Woodlot operators are eligible if they plant the trees they are harvesting.
Similar programs
| Program | Type | Amount | Status |
|---|---|---|---|
| EDC Direct lending | Loan, Loan Guarantee | Direct loans that typically start at $1 million, structured to match your business needs, priced in line with commercial market rates | Open |
