Canadian Agricultural Loans Act

Marginal note:Payment of lenders’ losses

• 4 (1) Subject to this Act and, in particular, to the conditions set out in subsection (3), the Minister is liable to pay to a lender ninety-five per cent of any loss sustained by it as a result of a loan made by it to a farmer for any of the following purposes in relation to farming in Canada:

  • (a) the purchase of, major repair to or major overhaul of tools, implements, apparatus and machines of any kind not usually affixed to real property;

  • (b) the purchase or installation of, major repair to or major overhaul of

    • (i) implements, apparatus and machinery of any kind usually affixed to real property, or

    • (ii) machinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;

  • (c) the purchase of livestock, including

    • (i) horses and other equines,

    • (ii) cattle, sheep, goats and other ruminants,

    • (iii) swine, poultry, bees and fur-bearing animals, and

    • (iv) any other prescribed animal;

  • (d) the alteration or improvement of machinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;

  • (e) the erection or construction of fencing or works for drainage;

  • (f) the construction, repair or alteration of, or making of additions to, any building or structure on a farm;

  • (g) the purchase of additional land;

  • (h) any other purpose that is prescribed; or

  • (i) the consolidation or refinancing of the debts of the farmer incurred for such purpose described in any of paragraphs (a) to (h) as is prescribed.

• Marginal note:Exclusion of home improvements

  (2) Subsection (1) does not apply in respect of a loan made for the purpose of financing improvements to a private dwelling.

• Marginal note:Conditions

  (3) The conditions referred to in subsection (1) are as follows:

  • (a) the loan was made pursuant to an application signed by the farmer in the form established or approved by the Minister, stating the purpose for which the proceeds of the loan were to be expended;

  • (b) the application stated that the farmer held an interest in the farming operation of the nature prescribed for loans made for that purpose;

  • (c) the principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other loans under this Act and guaranteed farm improvement loans under the Farm Improvement Loans Act previously made to the farmer and disclosed in the farmer’s application, or of which the lender has knowledge, exceed two hundred and fifty thousand dollars;

  • (d) the loan was repayable in full by the terms thereof

    • (i) in the case of a loan made for the purpose described in paragraph (1)(g), in not more than fifteen years, and

    • (ii) in the case of a loan made for any other purpose, in not more than ten years;

  • (e) no fee, service charge or charge of any kind was by the terms of the loan payable to the lender in respect of the loan as long as the farmer was not in default, other than

    • (i) a prescribed fee or charge,

    • (ii) a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), and

    • (iii) interest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae;

  • (f) the repayment of the loan was secured in the prescribed manner;

  • (g) the loan was made on such terms and in accordance with such conditions, in addition to those specified in paragraphs (a) to (f), as were prescribed for loans made for that purpose; and

  • (h) the lender exercised the same care and prudence in granting and administering the loan as it exercises in granting and administering, in the ordinary course of its business, loans in respect of which this Act does not apply.