Recent changes to Farm Credit Canada’s transition loan are giving those agriculture and agri-food business owners who are transferring farm or business assets to new owners a new option to consider.
The enhanced FCC transition loan is specifically designed to facilitate the transfer of assets, making it easier for both buyers and sellers. The new terms allow disbursements to the seller over a period that extends to 10 years. The loan is available for farms, agribusiness or food businesses going through changes in ownership, be it within or outside the family, FCC said in a release Wednesday.
The loan’s new terms come at a very important time, with more than $50 billion in farm assets expected to be transferred in the next 10 years.
Benefits for the seller include guaranteed full payment of the sale proceeds by FCC, customized payment schedule for up to 10 years, and
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For the buyer, there is no need for upfront capital for a down payment, and the flexibility to choose between improving cash flow or building equity (potential to reduce interest expense and pay off loan sooner). FCC’s AgExpert software is included for the buyer.
“One of the most consistent challenges faced by Canadian producers is transitioning their operations to either family or an outside qualified buyer. It is complex, nuanced, and emotional,” said Justine Hendricks, FCC president and CEO.
“For our part, we’ve been working hard to build a loan product that makes transition and sale easier for both buyers and sellers. Whether the buyers are new to the sector or not, this product is focused on delivering peace of mind and flexibility to Canadian agriculture and agri-food producers. It’s designed specifically with affordability and success in mind.”
