Farmland Financing Program — Up to 450 Acres
PE, Canada
Loan to purchase farmland in Prince Edward Island (PEI)
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|maxCount
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|timelineUnspecified
grant_single|financingType
Loans and Capital investments
grant_single|eligibleIndustries
- grant_single|allIndustries
grant_single|grantors
- Finance PEI
- Government of Prince Edward Island
grant_single|status
grant_card_status|open
grant_single_labels|preview
Term loan to finance up to 80% of the purchase price of a maximum of 450 acres of farmland with either interest-only payments or a fixed interest rate of 6%.
grant_single_labels|projects
Eligible projects for the Farmland Financing grant primarily include purchasing farmland within PEI with specific financing terms. The grant offers two main financing streams for such purchases.
- Term loan to finance up to 90% - 100% of the purchase price of a maximum of 150 acres of farmland, with a fixed interest rate of 6% over a five-year term, and blended principal and interest payments
- Term loan to finance up to 80% of the purchase price of a maximum of 450 acres of farmland, with options for either interest-only payments for five years at the prevailing interest rate or a fixed interest rate of 6% over a five-year term with blended principal and interest payments
grant_single|admissibleProjectsExample
$4,000,000
Summerside
Purchasing 300 acres of farmland for vegetable cultivation
$6,000,000
Kensington
Acquisition of 450 acres of farmland for organic farming
$1,800,000
Charlottetown
Acquisition of 150 acres of arable farmland PE
$4,800,000
Alberton
Purchase 350 acres of farmland for rotational grazing
$3,200,000
Moncton
Buy 200 acres of farmland for mixed farming
$1,350,000
Souris
Acquiring 100 acres of farmland for berry farming
grant_single_labels|admissibility
Eligible farmers in PEI can apply for a term loan to finance the purchase of farmland if they meet certain educational, operational, and financial criteria.
- Any farmer that has an acceptable combination of five years post-secondary education in agriculture and/or work experience in a farming operation
- Expansion/Succession - the farming operation must be a viable business venture with annual sales of at least $15,000 from agricultural commodities, supported by Income Tax Returns
- New Entrant - cash flow projections to indicate the following: i) required annual sales of $15,000 from agricultural commodities will be met, ii) adequate debt servicing to support the proposed land purchase
- You must have a valid Environmental Farm Plan and Soil Conservation Plan for the farmland being purchased
- The land being financed must be available to be taken as a first charge against the loan
- The Shareholder(s) must provide a Personal Guarantee
- You must be a Canadian citizen and a permanent resident of PEI
grant_eligibility_criteria|who_can_apply
The Farmland Financing program in PEI is available to eligible farmers looking to purchase farmland. It supports both new and expanding farmers, as well as those involved in farmland succession.
- New and expanding farmers
- Farmers involved in farmland succession
grant_eligibility_criteria|who_cannot_apply
There are specific types of companies that are not eligible for this grant. Companies involved in the tobacco, alcohol, gambling, or adult entertainment industries are not eligible for this grant.
- Tobacco industry
- Alcohol industry
- Gambling industry
- Adult entertainment industry
grant_eligibility_criteria|eligible_expenses
Eligible expenses for the Farmland Financing grant include the purchase price of farmland. Note that woodland, barns, and other structures or equipment are excluded.
- Purchase price of farmland
grant_eligibility_criteria|zone
The eligible geographic zone for this grant is Prince Edward Island (PEI), Canada.
- Prince Edward Island (PEI), Canada
grant_single_labels|criteria
The evaluation and selection criteria for the Farmland Financing grant are based on several factors including educational and work experience requirements, financial viability of the farming operation, and compliance with environmental plans.
- Acceptable combination of five years post-secondary education in agriculture and/or work experience in a farming operation
- Expansion/Succession: Annual sales of at least $15,000 from agricultural commodities, supported by Income Tax Returns
- New Entrant: Cash flow projections indicating required annual sales of $15,000 from agricultural commodities and adequate debt servicing to support the proposed land purchase
- Valid Environmental Farm Plan and Soil Conservation Plan for the farmland being purchased
- Farmland must be available to be taken as a first charge against the loan
- Shareholder(s) must provide a Personal Guarantee
- Applicant must be a Canadian citizen and a permanent resident of PEI
grant_single_labels|register
- Step 1: Ensure Eligibility
- Verify that you have the required combination of five years post-secondary education in agriculture and/or work experience in a farming operation
- Confirm your farming operation is a viable business venture with annual sales of at least $15,000 from agricultural commodities, supported by Income Tax Returns (for expansion/succession)
- Prepare cash flow projections indicating the required annual sales of $15,000 from agricultural commodities and adequate debt servicing to support the land purchase (for new entrants)
- Validate you have a valid Environmental Farm Plan and Soil Conservation Plan for the farmland being purchased
- Ensure the land being financed is available to be taken as a first charge against the loan
- Prepare to provide a Personal Guarantee as a Shareholder
- Confirm you are a Canadian citizen and a permanent resident of PEI
- Step 2: Prepare Required Documents
- Complete the Application for Financial Assistance
- Prepare a Business Plan by a qualified Chartered Accountant, including 3 years of cash flow projections and, if applicable, 3 years of historical financial statements
- Obtain an Appraisal by an Accredited Appraiser
- Step 3: Submit Application
- Submit the completed application and all required documents to an Account Manager with Finance PEI
- Step 4: Interview with Account Manager
- Conduct an interview with the Account Manager to discuss your business proposal and the next steps to determine eligibility
grant_single_labels|otherInfo
There are additional important details about the Farmland Financing grant to consider.
- Finance PEI has set aside a $10 million investment portfolio for this program.
- Applicants must provide an Environmental Farm Plan and Soil Conservation Plan for the farmland.
- Personal Guarantee from Shareholder(s) is required.
- The financed land must be available as a first charge against the loan.
Apply to this program
Farmland Financing Program: Financial Support for PEI Farmers
The Farmland Financing program offers eligible farmers in PEI two financing streams to assist in the purchase of farmland. This program provides term loans covering up to 100% of the purchase price, depending on the acreage, with fixed interest rates for a five-year term.
Understanding the Farmland Financing Program
The Government of Prince Edward Island (PEI) recognizes the unique challenges faced by farmers, particularly those looking to expand or transition their farming operations. To address these challenges, Finance PEI has established the Farmland Financing program. This initiative aims to support farmers in acquiring farmland, thereby fostering the agricultural sector in PEI. The program offers favorable financing terms, ensuring that both new entrants and established farmers have access to the necessary resources to grow their businesses.
Financing Streams
The Farmland Financing program provides two distinct financing streams. Each stream is designed to cater to different needs, based on the size of the farmland being purchased and the financial position of the applicant.
- Stream 1: This stream allows farmers to finance up to 90% to 100% of the purchase price of a maximum of 150 acres of farmland. The loan comes with a fixed interest rate of 6% over a five-year term. Payments are structured with blended principal and interest, making it easier for farmers to manage their financial obligations.
- Stream 2: This stream is for larger acquisitions, enabling farmers to finance up to 80% of the purchase price of a maximum of 450 acres of farmland. Applicants can choose between two payment options:
- Interest-only payments for a five-year period at the prevailing interest rate, providing initial cash flow relief.
- A fixed interest rate of 6% over a five-year term, with blended principal and interest payments, helping to stabilize long-term financing costs.
It is important to note that the financing provided under this program is strictly for farmland. Woodland, barns, other structures, and equipment are not eligible for financing.
Eligibility Criteria
To qualify for the Farmland Financing program, applicants must meet several specific criteria:
- Experience and Education: Applicants must have an acceptable combination of five years of post-secondary education in agriculture and/or work experience in a farming operation. This ensures that the individual has the necessary expertise to manage and grow an agricultural business.
- Viable Business: For expansion or succession, the farming operation must be a viable business venture with annual sales of at least $15,000 from agricultural commodities. This must be supported by Income Tax Returns. New entrants must provide cash flow projections indicating that they will achieve the required annual sales and have adequate debt servicing capacity to support the proposed land purchase.
- Environmental Compliance: Applicants must have a valid Environmental Farm Plan and Soil Conservation Plan for the farmland being purchased. This commitment highlights the program's emphasis on sustainable agricultural practices.
- First Charge on Land: The land being financed must be made available to be taken as a first charge against the loan, securing the lender's interest in the property.
- Personal Guarantee: Shareholders involved in the farming operation must provide a personal guarantee, further securing the loan.
- Residency: Applicants must be Canadian citizens and permanent residents of PEI, ensuring that the benefits of the program are directed towards local farmers.
Application Process
The application process for the Farmland Financing program involves several key steps:
- Application for Financial Assistance: Complete the Application for Financial Assistance form, which is available through Finance PEI. This form serves as the initial documentation of interest and eligibility.
- Supporting Documentation: Prepare and submit a business plan. This plan must be prepared by a qualified Chartered Accountant and be acceptable to Finance PEI. It should include three years of cash flow projections and three years of historical financial statements, if applicable. Additionally, an appraisal by an Accredited Appraiser is required to determine the value of the farmland.
- Submission and Interview: Submit the completed application and all supporting documents to an Account Manager with Finance PEI. The Account Manager will conduct an interview with the applicant to discuss the business proposal in detail and to determine eligibility for the program.
It is crucial for applicants to meticulously prepare their business plans and ensure that all required documentation is accurate and comprehensive. This will facilitate a smoother application process and improve the chances of receiving financing.
Advantages of the Farmland Financing Program
The Farmland Financing program offers several advantages that make it an attractive option for farmers in PEI:
- High Loan-to-Value Ratio: With financing available for up to 100% of the purchase price, farmers can acquire farmland with minimal initial capital investment. This makes the program particularly beneficial for new entrants and expanding operations.
- Fixed Interest Rate: The fixed interest rate of 6% over a five-year term provides stability and predictability in loan repayment. Farmers can better manage their financial planning without worrying about fluctuating interest costs.
- Flexible Payment Options: The availability of interest-only payments for the first five years offers initial cash flow relief, giving farmers time to establish and grow their operations before principal repayments begin.
- Focus on Sustainability: The requirement for an Environmental Farm Plan and Soil Conservation Plan ensures that financed farmland is managed sustainably, promoting long-term ecological health and productivity.
Conclusion
The Farmland Financing program by Finance PEI represents a significant opportunity for farmers in Prince Edward Island to acquire and expand farmland. With favorable loan terms, high financing percentages, and a commitment to sustainable agricultural practices, the program stands as a robust support mechanism for the farming community. Eligible farmers are encouraged to meticulously prepare their applications, ensuring that all criteria are met, and to engage with Finance PEI for guidance throughout the process. By leveraging this program, farmers can secure the resources needed to contribute to PEI's thriving agricultural sector.