4 Qualifications
of applicant
5 Purposes of
loan
6 Loan limits
7 Terms and
conditions
8 Agreements
9 Guarantees
10 Collection of
loans
11 Claim for loss
12 Program limit
13 Coming into
force
Schedule
Definitions
1 In this Regulation,
(a) “Act”
means the Farm Credit Stability Fund Act;
(b) “Category
A loan” means an eligible loan referred to in section 5(1)(a) and (a.1) all of
the proceeds of which are to be used for the refinancing or consolidation of
existing debt owed to the same lending institution that is making the eligible
loan;
(c) “Category
B loan” means an eligible loan referred to in section 5(1)(a) and (a.1) all of
the proceeds of which are to be used for the refinancing or consolidation of
existing debt owed to a creditor other than the lending institution that is
making the eligible loan;
(d) “Category
C loan” means an eligible loan referred to in section 5(1)(b) or (c);
(e) “eligible
loan” means a loan that is certified by the Minister under section 2;
(f) “farm
household” means the applicant and
(i) the applicant’s spouse, including an adult interdependent
partner, and
(ii) the applicant’s dependent children, if any, under 18 years of
age,
but does not include a
spouse who, at the time of application,
(iii) is living apart from the applicant pursuant to a court order or a
legally enforceable separation agreement, or
(iv) has been living apart from the applicant for at least 6 months
other than pursuant to a court order or legally enforceable separation
agreement;
(g) “Minister” means the Minister of
Agriculture.
AR 339/86
s1;169/88;236/89;109/2003
Eligible loans
2(1) The
Minister may certify a loan made or to be made by the lending institution to be
an eligible loan by issuing to the lending institution an Alberta Verification
Number in respect of the loan.
(2) The Minister may delegate to any employee of
the Government the power to certify loans under subsection (1).
AR 339/86 s2
Applicants
3 An individual, a partnership
or a corporation may apply for an eligible loan.
AR 339/86 s3
Qualifications of
applicant
4(1) An applicant for an eligible loan shall
establish to the satisfaction of the Minister that, after the loan is made,
(a) he
will be a primary producer of agricultural products,
(b) he
will hold leasehold or freehold farm land in Alberta, and
(c) he
will be actively and directly carrying on a farming operation with a reasonable
expectation of profit.
(2) An applicant who is an individual
shall, in addition to the requirements of subsection (1), establish to the
satisfaction of the Minister that he is
(a) a
Canadian citizen or a permanent resident within the meaning of the Immigration
Act, 1976 (Canada), and
(b) ordinarily
resident in Alberta.
(3) An
applicant that is a partnership shall, in addition to the requirements of
subsection (1), establish to the satisfaction of the Minister that
(a) its
farming operations are directed and managed in Alberta, and
(b) the
partners who hold in the aggregate
(i) at least 2/3 of the votes
attaching to units of the partnership, and
(ii) the right to at least 2/3 of
the net assets of the partnership on dissolution
meet the requirements of
subsections (1)(a) and (c) and (2).
(4) An
applicant that is a corporation shall, in addition to the requirements of
subsection (1), establish to the satisfaction of the Minister that
(a) its
farming operations are directed and managed in Alberta,
(b) the
voting shares of the corporation, including shares carrying the right to vote
only on the occurrence of a certain event, to which are attached at least 2/3
of the total votes attached to all voting shares of the corporation, are
beneficially held by individuals who meet the requirements of subsections
(1)(a) and (c) and (2), and
(c) the shares carrying the right to at least a
2/3 share in the net assets of the corporation on
dissolution are beneficially held by individuals who meet the requirements of
subsections (1)(a) and (c) and (2).
AR 339/86 s4
Purposes of loan
5(1) A loan qualifies as an eligible loan if the
proceeds of the loan will be used
(a) to
refinance or consolidate existing debt, other than an operating line of credit,
including interest and principal in arrears, that was incurred on or before
August 5, 1986 in respect of the farming operations to which the application
relates,
(a.1) to
refinance or consolidate existing debt in the form of an operating line of
credit, including interest and principal in arrears, that relates to the
farming operations to which the application relates and that existed on August
5, 1986,
(b) to
(i) acquire land or make permanent improvements to land,
(ii) acquire, construct or make permanent improvements to farm
buildings,
(iii) acquire, construct or make permanent improvements to fixed
machinery or equipment,
(iv) acquire livestock, excluding poultry, for breeding purposes,
(v) acquire farm machinery or farm implements,
(vi) acquire a quota under the Dairy Board Act and the
regulations under that Act, or
(vii) acquire a quota under the Marketing of Agricultural Products
Act and the regulations under that Act
for the purposes of the
farming operation to which the application relates, or
(c) to
refinance or consolidate existing debt, including principal and interest in
arrears, that
(i) was incurred after August 5, 1986, and
(ii) was incurred for any of the purposes referred to in clause (b),
and the loan is made
with a view to enhancing or maintaining income from the farming operation to
which the application relates.
(1.1) Subject
to section 6, the maximum amount of an eligible loan under subsection (1)(a.1)
shall be calculated in accordance with the following:
(a) in
the case of an eligible loan made before July 1, 1988, the aggregate of that
loan and all previous loans to the applicant under subsection (1)(a.1) shall
not exceed the outstanding balance of the operating line of credit, including
principal and interest in arrears, on August 5, 1986;
(b) in
the case of an eligible loan made on or after July 1, 1988, the maximum amount
of that loan shall not exceed the lesser of
(i) the outstanding balance of the operating line of credit, including
the principal and interest in arrears, on the date of execution of the
application by the applicant, and
(ii) the outstanding balance of the operating line of credit,
including the principal and interest in arrears, on August 5, 1986,
and the aggregate of that
loan and all previous loans to the applicant under subsection (1)(a.1) shall
not exceed the outstanding balance of the operating line of credit, including
the principal and interest on arrears, on August 5, 1986.
(2) A
loan does not qualify as an eligible loan if it is made for any of the
following purposes:
(a) to
construct or improve a residential building or a mobile home;
(b) to
acquire a residential building, including a mobile home, except where the
building is attached to land that is being acquired under the loan to carry on
a farming operation with a reasonable expectation of profit;
(c) to
acquire a private passenger vehicle or recreational vehicle, or a truck that is
rated as 3/4 ton or smaller;
(d) to
refinance a loan
(i) from a shareholder of an applicant corporation to the applicant
corporation, or
(ii) from a partner in an applicant partnership
to the applicant partnership.
AR 339/86
s5;47/87;169/88;179/89
Loan limits
6(1) Subject to this section a loan qualifies as an
eligible loan only if,
(a) in
a case where only 1 farm household is actively involved in the farming
operation, the loan, if made, together with the aggregate of
(i) the original principal amounts of eligible loans that were
previously made to the farm household,
(ii) that portion of the original principal amounts of any eligible
loans previously made to a partnership or corporation that is attributable to
the farm household,
(iii) the outstanding balance on the amount of any loans previously
made to the farm household by the Alberta Agricultural Development Corporation,
and
(iv) the outstanding balance on that portion of any loans previously
made to a partnership or corporation by the Alberta Agricultural Development
Corporation that is attributable to the farm household
would not exceed
$250 000, or
(b) in
a case where more than 1 farm household is actively involved in the farming
operation through a partnership, corporation or communal arrangement,
(i) the portion of the loan attributable to any of the farm
households plus the aggregate of
(A) the original principal amounts of eligible
loans that were previously made to that farm household,
(B) that portion of the original principal
amounts of any eligible loans previously made to the partnership or
corporation, or any other partnership or corporation, that is attributable to
that farm household,
(C) the outstanding balance on the amount of any
loans previously made to that farm household by the Alberta Agricultural
Development Corporation, and
(D) the outstanding balance on that portion of
any loans previously made to the partnership or corporation, or any other
partnership or corporation, by the Alberta Agricultural Development Corporation
that is attributable to that farm household
would not exceed
$250 000,
(ii) the portion of the loan attributable to any of the farm
households plus the aggregate of that portion of
(A) the original principal amounts of eligible
loans, and
(B) the outstanding balance of loans by the
Alberta Agricultural Development Corporation
previously made to
the partnership or corporation that is attributable to any of the farm
households does not exceed the value of that farm household’s interest in the
gross assets of the partnership or corporation, and
(iii) the amount of the loan plus the aggregate of
(A) the original principal amounts of eligible
loans that were previously made in respect of that farming operation, and
(B) the outstanding balance of loans previously
made in respect of that farming operation by the Alberta Agricultural
Development Corporation
would not exceed
the lesser of the value of the gross assets of the partnership or corporation
and $750 000.
(1.1) The
outstanding balance of direct loans by the Alberta Agricultural Development
Corporation in the form of disaster assistance loans shall not be included in
the calculation of the outstanding balance of loans made by the Corporation for
the purposes of subsection (1).
(2) In
determining whether a loan qualifies as an eligible loan under subsection (1),
no regard shall be taken of clauses (a)(iii) or (iv), (b)(i)(C) or (D),
(b)(ii)(B) or (b)(iii)(B) of that subsection, as the case may be, to the extent
that the purpose of the eligible loan is to refinance or consolidate the loan
or portion of the loan from the Alberta Agricultural Development Corporation.
(2.1) Where
the person to whom a loan was made under the Act dies, subsection (1) does not
apply to
(a) the
assumption of that loan by, or
(b) a
new loan to
another person, where
(c) that
other person acquires the assets to which the loan relates by operation of law
resulting from the death of the person to whom the loan was made, and
(d) the
purpose of the assumption or the new loan is to continue or transfer to that
other person the benefit of the loan made under the Act.
(2.2) Subsection
(1) does not apply to the assumption of a loan made under the Act or to a new
loan made under the Act where the purpose of the assumption or new loan is to
continue or transfer to another person the benefit of a loan made under the
Act, and the assumption or new loan occurs after the applicable date referred
to in section 14(2) of the Act.
(2.3) Where
a loan made under the Act is assumed or a new loan is made under the Act and
the purpose of the assumption or new loan is to continue or transfer to another
person the benefit of a loan made under the Act, if
(a) the
assumption or new loan occurs after June 30, 1989 and before the applicable
date referred to in section 14(2) of the Act, and
(b) the
Minister is satisfied that by not later than April 13, 1989 a binding agreement
existed, or substantial steps had been taken towards a binding agreement,
providing for the assumption or new loan,
the references in
subsection (1) to $250 000 and $750 000 shall be read as
$400 000 and $1 200 000 respectively.
(3) The calculation of the portion of a loan that
is attributable to a farm household and the calculation of value of gross
assets for the purposes of subsection (1) shall be made in a manner acceptable
to the Minister.
AR 339/86
s6;169/88;62/89;179/89;236/89;109/2003
Terms and conditions
7(1) An eligible loan is subject to the following
terms and conditions:
(a) the
interest payable shall be at an effective annual rate of 9% calculated
annually;
(b) interest
on any amount in arrears, except on that portion of principal due as a result
of acceleration of the repayment of the loan shall be payable at an annual rate
not exceeding the greater of
(i) 9%, and
(ii) the prime rate of the lending institution from time to time plus
2%;
(c) the
term of the loan shall be 20 years unless the borrower declares that a shorter
term would be advantageous to him and requests a shorter term, but in no case
shall the term be less than 10 years;
(d) the
loan shall be repayable in monthly, quarterly, semi‑annual or annual
installments;
(e) the
loan shall be repayable by
(i) equal blended payments of principal and interest on each payment
date over the term of the loan, or
(ii) equal payments of principal payable at least once annually, with
interest payments on the declining principal balance over the term of the loan;
(f) no
penalty or fee for prepayment of any or all of the principal under the loan is
chargeable by the lending institution.
(2) Subject to subsection (1) and to the agreement
between the Minister of Finance and a lending institution, the terms of
repayment of an eligible loan may be amended during the term of the loan.
AR 339/86 s7;27/2002
Agreements
8 An agreement between the Minister of
Finance and a lending institution
(a) shall
contain terms and conditions respecting
(i) a borrower’s ability to repay an eligible loan, and
(ii) the security to be taken by the lending institution on the
eligible loan,
and
(b) may contain any other terms and conditions respecting
the making and repayment and the guarantee of eligible loans that the Minister
of Finance considers appropriate.
AR 339/86 s8;27/2002
Guarantees
9(1) Subject to this Regulation and to the terms of
any agreement between the Minister of Finance and a lending institution, the
Minister of Finance may guarantee eligible loans on behalf of the Government.
(2) A guarantee may be executed by the Minister of
Finance, the Deputy Minister of Finance, Finance and Revenue, or any employee
in the Treasury Department who is authorized for that purpose by the Minister
of Finance.
AR 339/86 s9;27/2002
Collection of loans
10 A lending institution shall, in
accordance with its prudent banking practice, take all reasonable steps to
collect eligible loans, including
(a) reasonable
realization of security, and
(b) where
appropriate, legal action to recover any deficiency
before submitting a
claim for loss to the Minister of Finance.
AR 339/86
s10;169/88;27/2002
Claim for loss
11(1) A claim for loss in respect of a guarantee may
be made for
(a) the
unpaid principal amount of the eligible loan,
(b) the
uncollected earned interest until the claim is paid,
(c) legal
fees and disbursements incurred by the lending institution in the collection
process, and
(d) any
other necessary disbursements incurred by the lending institution in collecting
or endeavouring to collect an eligible loan or in protecting the interests of
the Crown and the lending institution,
less any amount
recovered by any means referred to in section 10.
(2) Where
a claim for loss is submitted, the Minister of Finance shall pay the loss on
the eligible loan up to a maximum amount calculated in accordance with the
Schedule.
(3) If
(a) a
borrower under an eligible loan provides to the lending institution false or
misleading information in connection with the application and the correct
information would have rendered the borrower ineligible for the loan, and
(b) the
lending institution on the request of the Minister demands repayment in full of
the loan,
notwithstanding
subsection (2), 100% of the loss is payable under the guarantee unless the
Minister of Finance determines that, at any time prior to making the final
advance under the loan, the lending institution was aware of the false or
misleading information, in which case the guarantee extends only to that
portion of the loan that was advanced before the date on which the lending
institution became aware of the false or misleading information.
AR 339/86
s11;47/87;27/2002
Program limit
12 The amount prescribed for the
purposes of section 14 of the Act is $2 500 000 000.
AR 339/86 s12;179/89
Coming into force
13 This Regulation is deemed to
have come into force on August 6, 1986.
AR 339/86 s13
