Government of Canada / Gouvernement du Canada
Symbol of the Government of Canada

Search

Farm Improvement Loans Regulations (C.R.C., c. 645)

Regulations are current to 2020-07-28

Agricultural Equipment Loans

 Subject to the Act and these Regulations, an agricultural equipment loan or a farm electric system loan is a guaranteed farm improvement loan if

  • (a) the loan is made to the owner of the farm;

  • (b) the loan is made in an amount not greater than 75 per cent of the estimated cost of the equipment or farm electric system, including the cost of installation but excluding the cost of any labour of the borrower, as set out in the application for the loan;

  • (c) and (d) [Revoked, SOR/78-138, s. 4]

  • (e) the bank has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/78-138, s. 4

Building Loans

 Subject to the Act and these Regulations, a building loan is a guaranteed farm improvement loan if

  • (a) the loan is made to the owner of the farm;

  • (b) the loan is made in an amount not greater than 90 per cent of the estimated cost of the construction, renovation, alteration, repair or extension of any building or structure, excluding the cost of any labour of the borrower, as set out in the application for the loan;

  • (c) and (d) [Revoked, SOR/78-138, s. 5]

  • (e) the bank has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/78-138, s. 5

Additional Land Loans

 Subject to the Act and these Regulations, an additional land loan is a guaranteed farm improvement loan if

  • (a) the loan is made to the owner of the farm;

  • (b) the loan is made in an amount not greater than 90 per cent of the market value of

    • (i) the land, and

    • (ii) any buildings used for the purpose of farming;

  • (c) [Revoked, SOR/78-138, s. 6]

  • (d) the bank has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/78-138, s. 6

Improvement or Development Loans

 Subject to the Act and these Regulations, an improvement or development loan is a guaranteed farm improvement loan if

  • (a) the loan is made to the owner of the farm, or to the tenant of the farm if the tenant has a right of tenancy extending at least two years beyond the repayment period of the loan;

  • (b) the loan is made in an amount not greater than 90 per cent of the estimated cost of the alteration or improvement of a farm electric system, works for drainage, the erection or construction of fencing or any work for the improvement or development of a farm, excluding the cost of any labour of the borrower, as set out in the application for the loan;

  • (c) and (d) [Revoked, SOR/78-138, s. 7]

  • (e) the bank has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/78-138, s. 7

Major Repair or Major Overhaul Loans

 Subject to the Act and these Regulations, a major repair or major overhaul loan is a guaranteed farm improvement loan if

  • (a) the loan is made to the owner or tenant of the farm who is the owner of the agricultural implement or equipment or equipment for bee-keeping in respect of which the proceeds of the loan are to be expended;

  • (b) the loan is made in an amount not greater than 75 per cent of the estimated cost of the major repair to or major overhaul of the agricultural implement or equipment or equipment for bee-keeping, excluding the cost of any labour of the borrower, as set out in the application for the loan;

  • (c) [Revoked, SOR/78-138, s. 8]

  • (d) the bank has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/78-138, s. 8

Security

  •  (1) A bank shall, at the time of making a loan of any prescribed class, take security for the repayment thereof

    • (a) under section 88 of the Bank Act;

    • (b) by way of chattel mortgage or commercial pledge;

    • (c) by way of a mortgage or hypothec on real property;

    • (d) by way of an assignment of any rights and interest of the borrower under an agreement for sale; or

    • (e) by way of a written undertaking by the borrower to give security as required under paragraph (a), (b), (c) or (d) as the case may be.

  • (2) A responsible officer of a bank may, whenever he deems it appropriate, release any security taken pursuant to subsection (1), but every bank shall, throughout the term of a loan, maintain adequate security in accordance with normal banking practice in a manner prescribed by subsection (1) for the repayment of the balance of the loan outstanding at any time.

  • (3) Where, in the opinion of a responsible officer of a bank, security additional to the security taken pursuant to subsection (1) or (2) is deemed necessary, the bank may take such additional security for the repayment of the loan as the responsible officer considers appropriate.

  • (4) Every bank shall, at the time of making a loan, require the borrower to give to the bank, in addition to any security taken pursuant to subsection (1) or (2), a written promise to repay the loan signed by the borrower and setting forth the principal amount of the loan, the basis for establishing the rate of interest and the repayment terms.

  • SOR/78-138, s. 9
  • SOR/79-149, s. 1

Loan Terms and Revision of Loan Terms

  •  (1) Repayment of a loan shall be made in instalments that are payable at least annually but, at the option of the bank, repayments may be scheduled more frequently than annually.

  • (2) Subject to paragraph 3(1)(e) of the Act, the terms of repayment of a loan shall be set out in the agreement in connection with the loan and the repayment period and the amount and frequency of instalment payments shall conform to the probable ability of the borrower to pay, having regard to the type of farming carried on by him, the relevant marketing conditions, the repayment of other obligations and to any other relevant circumstances.

  • (3) Where a borrower is in default in respect of the repayment of a loan or advises the bank that some of the terms of the agreement in connection with the loan are such that he may have to default, or where a borrower wishes to take out additional loans, and the bank is of the opinion that it would be appropriate in the light of the borrower’s total repayment obligations to alter or revise the terms of the loan or any agreement in connection therewith, the bank may, with the approval of the borrower, alter or revise the terms of the loan or agreement by

    • (a) extending the term for repayment of the loan within the maximum terms specified in the Act;

    • (b) changing the amount of the periodic instalments; or

    • (c) changing the periods between instalments, but in no case shall instalments be due less frequently than annually.

  • (4) [Revoked, SOR/78-138, s. 10]

  • (5) The terms of a loan or any agreement in connection therewith may not be altered or revised in a manner that would result in longer terms for repayment of the loan than the terms prescribed by paragraph 3(1)(e) of the Act or paragraph 8(d) of these Regulations unless the Minister approves the alteration or revision.

  • (6) Where the Minister approves the alteration or revision of the terms of a loan or any agreement in connection therewith in accordance with subsection (5), the alteration or revision shall not discharge the liability of the Minister to the bank under the Act.

  • SOR/78-138, s. 10

Rate of Interest

  •  (1) Subject to subsection (4), the maximum rate of interest per annum payable to a bank incorporated by or under the provisions of the Bank Act or established pursuant to the Treasury Branches Act of the Province of Alberta in respect of a loan is the aggregate of one per cent per annum and the prime lending rate in effect at that bank on the date the agreement in connection with the loan was signed.

  • (2) Subject to subsection (4), the maximum rate of interest per annum payable to a bank other than a bank incorporated by or under the provisions of the Bank Act or established pursuant to the Treasury Branches Act of the Province of Alberta in respect of a loan shall be determined by the Minister for each month prior to the first day of that month and shall be the aggregate of one per cent per annum and the average of the prime lending rates in effect at the following chartered banks on the third Wednesday of the month preceding the month for which the rate is determined:

    • (a) the Bank of Montreal,

    • (b) the Bank of Nova Scotia,

    • (c) the Royal Bank of Canada,

    • (d) the Toronto Dominion Bank,

    • (e) the Banque Canadienne Nationale,

    • (f) the Banque Provinciale, and

    • (g) the Canadian Imperial Bank of Commerce,

    rounded to the nearest one-eighth of one per cent or, if the result would be equidistant from two multiples of one-eighth of one per cent, to that multiple thereof that is the lower.

  • (3) When the rate of interest determined by the Minister for a month pursuant to subsection (2) is a different rate from the rate in effect for the previous month, the Minister shall forthwith advise the banks to which subsection (2) applies of the new rate by such means as he sees fit.

  • (4) The rate of interest payable to a bank in respect of a loan shall be revised

    • (a) in the case of a bank incorporated by or under the provisions of the Bank Act or established pursuant to the Treasury Branches Act of the Province of Alberta, whenever the prime lending rate of that bank changes; and

    • (b) in the case of a bank other than a bank incorporated by or under the provisions of the Bank Act or established pursuant to the Treasury Branches Act of the Province of Alberta, on the first day of each month.

  • SOR/78-138, s. 11
  • SOR/79-149, s. 2
 
Date modified: