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 95 per cent — or if another percentage of not more than 95 per cent has been fixed by the regulations for the purpose of this subsection, that other percentage — 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) subject to the regulations, if any, 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 land;

  • (g.1) the purchase of shares in a corporation, of an interest in a partnership, or of a share or membership in a cooperative, if 90 per cent or more of the fair market value of the property of the corporation, the partnership, or the cooperative was attributable to property referred to in this subsection that was used principally in the course of carrying on the business of farming in Canada;

  • (g.2) the purchase of shares in a corporation, of an interest in a partnership or of a share or membership in a cooperative, if 90 per cent or more of the fair market value of the property of the corporation, the partnership, or the cooperative was attributable to shares, an interest in a partnership or memberships in a corporation, partnership or cooperative referred to in paragraph (g.1) or to property referred to in this subsection that was used principally in the course of carrying on the business of farming in Canada;

  • (g.3) the purchase of shares in a corporation, of an interest in a partnership or of a share or membership in a cooperative, if 90 per cent or more of the fair market value of the property of the corporation, the partnership, or the cooperative was attributable to shares, an interest in a partnership or memberships in a corporation, partnership or cooperative referred to in paragraph (g.2) or to property referred to in this subsection that was used principally in the course of carrying on the business of farming in Canada;

  • (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 the construction of or 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) if the loan is with respect to property and the regulations prescribe an interest or right that the farmer must hold or intends to hold in that property, the application stated the nature of that interest or right;

  • (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 previously made to the farmer and disclosed in the farmer’s application or of which the lender has knowledge, exceed

    • (i) for all the purposes set out in subsection (1), an aggregate amount of $500,000 or, if another amount has been fixed by the regulations, that other amount, and

    • (ii) for all the purposes set out in paragraphs (1)(a) to (e) and (g.1) to (i), an amount of $350,000 or, if another amount has been fixed by the regulations, that other amount;

  • (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.