Terms of Interest
Q. Can a lender consolidate/refinance loans that were previously financed under FIMCLA at the same lending
institution?
A. Yes. Only those loans originally made for an eligible purpose under FIMCLA can be
consolidated/refinanced.
Q. How much can be consolidated/refinanced?
A. The amount to be consolidated is the total of the outstanding principal balances of the loans to be
consolidated/refinanced to the maximum amount of $250,000.
Q. What general restrictions are there on consolidation/refinancing?
A. An up-to-date appraisal prior to consolidating/refinancing to determine that the amount being
consolidated/refinanced cannot exceed 80% of the value of the security being pledged.
Loans that are more than one year in arrears or loans being paid annually or more than six months in arrears where payments are made more
frequently than annually may not be consolidated/refinanced.
Consolidation of a lender's ordinary loans, loans that fall within the purpose of the Act must be referred to another
lender for consolidation/refinancing in order to register the loan under the Act.
A loan can only be consolidated/refinanced once.
Consolidation of a FIMCLA loan must remain within the prescribed amortization periods.
Q. When consolidating/refinancing a loan for which the original purpose was 'additional land' can the loan be termed out
over 15 years?
A. No. The maximum repayment is 10 years for any purpose with the exception of additional land. Additional land can be termed over 15 years.
Rationale: Consolidation/refinancing is an eligible loan purpose under the Act and is separate from the purpose of
'additional land'. 15 years is the maximum term for additional land and for all other purposes (including
consolidation/refinancing) is 10 years.
Q. Can loans be financed under FIMCLA at 100% if there is sufficient equity?
A. No. The eligible applicant must inject at least 20% into the project, of either the cost of the asset or the market value
whichever is the lessor amount. This also means that only 80% of the smaller value (cost on market value) will be
covered by the FIMCLA guarantee.
Q. What is the maximum amount that may be granted to an eligible partnership if both (or more) farmers have their own
land base?
A. The maximum is $250,000 divided by the number of individuals in the partnership. The difference of whatever is
owned by each individual may be financed up to a maximum of $250,000.
e.g. Partnership loan $250,000 (two individuals). Each individual owes $125,000 therefore, $125,000 may be financed under FIMCLA to each partner in their own
name.
Q. Can the rate of interest charged be lower than the amount set out in the Regulations?
A. Yes. The amount set out in the regulations is the maximum that may be charged. Lenders are encouraged to offer
competitive interest rates as one of the intended benefits to farmers from the loan guarantee is the access to loans at
reasonable terms.
Q. Can the borrower change from a fixed rate to a floating rate?
A. Yes, at the date of conversion or extension of the given fixed term, or at the lender's discretion.
Q. Can the borrower change from a floating to a fixed rate?
A. Yes. At the lenders discretion. (The lender is not obligated to submit a Schedule 2 - Revision of terms to FIMCLA Administration. We do however
ask the lender to complete the Schedule 2 and retain it on the lender's file.)
Q. What needs to be done when there is a rate change (fixed to floating)?
A. Copies of all loan documents i.e. amendment to original agreement, revision of terms schedule 2 must be retained on
the borrower's file in the event of a Claim for Loss.
Q. Can a borrower pre-pay or fully pay out a FIMCLA loan prior to the term?
A. Yes, but in the case of a fixed rate loans the lender may charge a penalty.
Q. Can a repayment on a loan be set up beyond the required annual instalment if interest is being paid at least annually?
A. No. The lender must ensure that there is at least an annual reduction in the principal balance advanced.
