Farming is the backbone of Canada’s economy and culture, but starting or expanding a farm can be costly. Whether you want to buy land, purchase equipment, raise livestock, or improve your farm infrastructure, having access to the right financing is critical.
Fortunately, Canada offers several loan programs and financial supports tailored specifically to farmers and agricultural businesses. This comprehensive guide will walk you through the main farming loan options in Canada, how to qualify, what to expect, and tips to help you succeed.
—
Why Farming Loans Are Important in Canada
Farming requires significant capital investment—land acquisition, machinery, livestock, and operational costs all add up quickly. Unlike many other businesses, farm income can be seasonal and unpredictable, which makes securing financing a challenge.
To support the agricultural sector, the Canadian government partners with financial institutions to offer loans that reduce risk for both lenders and borrowers. These loans help:
New farmers get started,
Existing farmers expand or improve their operations,
Agribusinesses innovate and compete globally.
—
Major Farming Loan Programs in Canada
1. Canadian Agricultural Loans Act (CALA) Program
The CALA Program is a federal government initiative designed to help farmers get credit by guaranteeing loans made by banks, credit unions, and other lenders. This guarantee reduces the lender’s risk and increases the chances you get approved.
Who Is Eligible?
Farmers with less than six years of experience (beginning farmers).
Established farmers looking to grow or improve.
Farm-related businesses, including cooperatives with a majority farmer ownership.
Part-time farmers.
What Can You Use the Loan For?
Buying farmland.
Building or repairing farm structures.
Purchasing equipment and machinery.
Buying livestock.
Refinancing existing debt.
Loan Amounts and Terms
Up to $500,000 for land and building purchases.
Up to $350,000 for equipment, livestock, or other farming needs.
Maximum combined loan of $500,000 per operation.
Repayment terms up to 15 years for land and 10 years for other purchases.
Interest rates typically at prime + 1% or fixed mortgage rate + 1%.
How to Apply?
Approach banks or credit unions participating in the CALA program.
Provide your farm business plan and financial details.
The lender will apply for the government guarantee.
Upon approval, you’ll receive funds with favorable loan terms.
—
2. Farm Credit Canada (FCC)
Farm Credit Canada is a federal Crown corporation dedicated exclusively to agriculture lending and services. FCC offers a broad range of financial products tailored to Canadian farmers.
What Loans Does FCC Offer?
Land purchase loans.
Equipment financing.
Operating credit for inputs like seeds and fertilizers.
Livestock financing.
Environmental and sustainable farming improvements.
Support for farm transitions and succession planning.
Who Can Borrow from FCC?
Farmers at any stage of their career.
Agribusinesses and food processors.
Indigenous and First Nations farmers.
Women and young farmer entrepreneurs.
Terms and Interest Rates
Loans can be for large or small amounts depending on your needs.
Flexible repayment schedules often aligned with farm income seasonality.
Interest rates competitive and tied to prime or fixed rates.
Terms can be up to 25 years for land and buildings.
How to Apply?
Contact FCC directly or visit a local office.
Prepare your business plan and financial documents.
FCC works with you to tailor a loan package suited to your operation.
—
Other Loan Sources and Supports
Banks & Credit Unions: Many offer specialized farm loans, some backed by CALA.
Provincial Programs: Some provinces have grants or loans for farming.
Federal Programs: AgriInvest, AgriStability, and AgriInsurance help manage risk.
—
How to Prepare for a Farm Loan Application
Lenders want to be sure you can repay the loan, so preparation is key:
Create a strong business plan: Include detailed information about your farm, your experience, expected income, and how the loan will help.
Organize your finances: Gather tax returns, credit history, and financial statements.
Prepare collateral: Farms, equipment, or other assets can secure the loan.
Know your market: Show understanding of farming risks and opportunities.
Get advice: Consult agricultural extension offices or financial advisors.
—
Tips to Maximize Your Chances of Approval
Start early — loan processing can take weeks.
Be honest and realistic in your financial forecasts.
Show a plan for loan repayment, considering seasonal income.
Demonstrate your farming knowledge and commitment.
Keep your personal and farm finances separate and well documented.
—
Example: Buying a Farm with a CALA Loan
Imagine you want to buy a 150-acre farm for $350,000 and purchase $80,000 worth of equipment. Under CALA, you can get:
$350,000 loan for the land (within $500,000 max),
$80,000 for equipment (within $350,000 max),
Total $430,000 loan (within the $500,000 combined limit).
You negotiate an interest rate of prime + 1%, with repayment terms of 15 years for land and 10 years for equipment. Your lender applies for the government guarantee and upon approval, funds are disbursed.
—
Final Thoughts
Farming loans in Canada provide crucial support to grow the agricultural sector and help farmers realize their dreams. Whether you are a new farmer just starting out or an established operator looking to expand, the CALA Program and Farm Credit Canada offer reliable and accessible financing solutions.
Start by understanding your financing needs, preparing a solid business plan, and reaching out to lenders experienced in agriculture. With the right loan and careful planning, your farming operation can thrive and contribute to Canada’s rich farming heritage.