“This new loan offers qualified producers who are under 40 years of age loans of up to $500,000 to purchase or improve farmland and buildings,” Ritz says.
Special provisions make the loans more affordable. Qualified producers can choose a variable interest rate at prime plus 0.5 per cent or a fixed special rate. The fixed rates vary from one day to another.
Additionally, there will be no loan processing fees for the Young Farmer Loan. On a loan of $500,000, the processing fees would typically be one half of one per cent or $2,500.
“By allowing young producers to borrow with no fees at affordable rates, the Young Farmer Loan will help them build their businesses and develop a solid credit history,” Stewart says. “As a responsible lender, we’re excited to see how they use this product to grow their business and the industry.”
FCC officials say the interest rates will be attractive compared to what a young producer might otherwise be paying. Financial institutions, including FCC, base their loan pricing on risk. One component of risk is financial history. Often, young producers don’t have a track record and therefore the rate they receive may not be as low as someone else with experience.