Canadian Agricultural Loans Act — F-2.7 6
Payment of lenders’ losses 6 (1) Subject to this Act and, in particular, to the conditions set out in subsection (2), the Minister is liable to pay to a lender 95 per cent — or if another percentage of not more than 95 per cent has been fixed by the regulations for the purpose of this subsection, that other percentage — of any loss sustained by it as a result of a loan made by it to a farm products marketing cooperative for any of the following purposes in relation to the processing, distribution or marketing in Canada of the products of farming: (a) the purchase of land; (b) the purchase or construction of any building or structure; (c) the repair or alteration of, or making of additions to, any building or structure; (d) the purchase or repair of machinery or apparatus; or (e) the consolidation or refinancing of the debts of the cooperative incurred for such purpose described in any of paragraphs (a) to (d) as is prescribed. Conditions (2) The conditions referred to in subsection (1) are as follows: (a) the loan was made pursuant to an application signed by the farm products marketing cooperative in the form established or approved by the Minister stating the purpose for which the proceeds of the loan were to be expended; (b) the application stated that 50 per cent plus one of the members or shareholders, as the case may be, of the farm products marketing cooperative are farmers and, if the loan is with respect to property and the regulations prescribe an interest or right that the cooperative must hold in that property, the application stated the nature of that interest or right; (c) the principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other loans previously made to the farm products marketing cooperative and disclosed in the cooperative’s application or of which the lender has knowledge, exceed (i) for all the purposes set out in subsection (1), an aggregate amount of $500,000 or, if another amount has been fixed by the regulations or any greater amount approved by the Minister pursuant to subsection (3), that other amount, and (ii) for all the purposes set out in paragraphs (1)(d) and (e), an amount of $350,000 or, if another amount has been fixed by the regulations or any greater amount approved by the Minister pursuant to subsection (3), that other amount; (d) the loan was repayable in full by the terms thereof (i) in the case of a loan made for the purpose described in paragraph (1)(a) or (b), in not more than twenty years, and (ii) in the case of a loan made for any other purpose, in not more than ten years; (e) no fee, service charge or charge of any kind was by the terms of the loan payable to the lender in respect of the loan as long as the farm products marketing cooperative was not in default, other than (i) a prescribed fee or charge, (ii) a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), and (iii) interest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae; (f) the repayment of the loan was secured in the prescribed manner; (g) the loan was made on such terms and in accordance with such conditions, in addition to those specified in paragraphs (a) to (f), as were prescribed for loans made for that purpose; and (h) the lender exercised the same care and prudence in granting and administering the loan as it exercises in granting and administering, in the ordinary course of its business, loans in respect of which this Act does not apply. Minister may increase limits (3) The Minister may, on the application of a lender made before the granting of a loan, approve an increase in each of the monetary limits referred to in paragraph (2)(c) to an aggregate amount not exceeding $3 million or, if another amount has been fixed by the regulations for the purpose of this subsection, that other amount. R.S., 1985, c. 25 (3rd Supp.), s. 6; 2009, c. 15, s.