The farm improvement and Marketing Cooperatives Loans Act, FIMCLA, can provide assistance to fruit growers with the purchase and planting of fruit trees for new varieties. Conditions of the loan are summarized as follows: the maximum term is ten years; the cost of loan is either prime rate plus 1% or at a fixed rate equal to the residential mortgage rate plus 1%; loans must not exceed 80% of the value of the asset being financed; the maximum loan is $250,000.
Fruit growers can plant now, pay later through an FCC loan.
Farm Credit Corporation, FCC, has expanded the plant now pay later loan to include all fruit and berry varieties grown for commercial production across Canada. This unique loan was originally introduced in 1996 to help vineyard expansion projects in Ontario and British Columbia. Fruit growers can use the loan to renovate or expand orchards, vineyards, berry farms or other types of production that take several years to yield a comercial crop. The loan allows clients to better manage their cash flow. It offers flexible terms and conditions to match production cycles and an amortization period that matches the life cycle of farms.
Repayment options include total payment deferral for up to three years or interest only payments for the first five years. With the deferral option, no payments are required in the first three growing seasons including the replant year. Interest that accrues during this period is capitalized at the end of the third growing season. in year four, an interest only payment is made and in year five blended payments begin with up to 20 years to repay. For example, a loan of $25,000 accrues approximately $5,000 of interest in three years. Thus at the end of three years, the loan becomes $30,000. Payments are then based on this loan amount and may be made annually. The loan covers all planting costs including the costs of drainage, land improvement, plants, planting costs, trellising, irrigation and maintenance in the first three years.
Those eligible for the loan include producers of grapes, apples and pears, tender fruit trees, including peaches, nectarines, apricots, cherries and plums, and all berries, including rasberries, blueberries, saskatoon berries and cranberries.
The plant now pay later loan was initiated through consultation with primary producers and agricultural groups to develop an innovative lending product that addresses specific financing needs.
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