Last updated: Aug. 9, 2017
Financing Programs for Farm Businesses
Farming is a unique occupation with its own challenges. The high cost of basic farming equipment, technology, and land and changing weather conditions are just a few challenges that can significantly impact a farm’s profitability.
That’s why the federal and provincial governments in Canada provide farmers with many different grants, subsidies, and contributions.
Below you’ll find a list of just some of the government grants, subsidies, and contributions for which Canadian farmers can apply.
AgriInvest is a federal program that helps Canadian farmers protect their businesses from a decline in profits. Each year, you could receive up to $15,000 from federal, provincial, and territorial governments to match any savings you have set aside.
The AgriInvest account grows as you make annual deposits based on a percentage of your allowable net sales. You can deposit up to 100% of your allowable net sales annually, with the first 1% matched by the government.
The AgriStability program protects Canadian farmers from big margin declines in their income, which may be a result of rising costs, a faltering market, or production losses. Through AgriStability, you are protected when your net farming income falls below 70% of your recent average.
The costs of AgriStability are shared by the federal (60%) and provincial (40%) governments. The maximum payment you can receive under the AgriStability program is $3.0 million.
To be eligible, you must:
- Farm at least 6 straight months annually
- Report your farming income to the Canada Revenue Agency
- Finish a production cycle (or try to) in the year you apply
- Pay an annual fee for your coverage
Advance Payments Program
The Advance Payments Program (APP) is a federal loan program that provides Canadian farmers with easy access to low-interest cash advances. For those in the agricultural business, an APP advance can help them meet their financial obligations.
Under the APP, agricultural producers can access up to $400,000 per program year in advances based on the value of their agricultural product. The Government of Canada pays the interest on the first $100,000 advanced.
Advances are repaid as the producer sells their agricultural product; they have up to 18 months to fully repay the advance for most commodities (up to 24 months for cattle and bison).
Canadian Agricultural Loans Act
Through the Canadian Agricultural Loans Act (CALA), Canadian agricultural producers can qualify for a repayable loan guarantee of up to $500,000 to help them access credit for their business. Farmers can use the loans to establish, improve, or develop farms. Agricultural co-operatives can also access loans to process, distribute, or market the products of farming.
Under the CALA, the federal government guarantees to the lender repayment of 95% of a net loss of an eligible loan. The maximum aggregate loan limit for any single farm operation is $500,000. The maximum aggregate loan limit for agricultural co-operatives is $3.0 million.
Farm Credit Canada
If your agribusiness is a farm operation, food processing business, farm equipment plant, or agri-biotech company, you could be eligible for financing to:
- Purchase or improve land, buildings, or equipment
- Buy quotas or livestock
- Expand your business domestically or export your products
- Make environmental improvements
- Fund diversification projects
FBC, Helping Farmers Access Government Financing Options
There are many farm business grants, subsidies, and contributions available to Canadian farmers from the federal and provincial governments. The key is finding the ones that are right for you and understanding how each program works.
If you operate a farm business and are interested in understanding which farm business grants, subsidies, and contributions are right for you, contact the farm tax specialists at FBC.
FBC has worked exclusively with Canadian farmers and small business owners since 1952. Over the last 65 years, we have helped tens of thousands of clients from across the country access government programs, minimize their tax obligations, and maximize their assets.
At FBC, we also understand that your tax planning needs are as unique as your farming business. That’s why we’re the only firm in Canada that offers integrated tax services on a year-round Membership basis.
For a fixed fee, Members get access to our tax planning, tax preparation, consultation, bookkeeping, and financial planning services. FBC also provides all new Members with a review of their previous 3 years’ tax returns.
For more information on FBC and the services we offer, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.