Farm Credit Canada reports the pace of applications for loans under the new Canadian Hog Industry Loan Loss Reserve Program is picking up.
The Loan Loss Reserve Program is part of a three tier Canadian pork industry restructuring plan.
It provides participating financial institutions guarantees on loans to allow producers to restructure short term debt.
Farm Credit Canada senior vice president portfolio and credit risk Remi Lemoine says it’s still too early to estimate how many producers will qualify.
The primary thing we’re looking at is the longer term viability, is there ability to pay back the debt.
We’re not as interested in things like security given the backing provided by the federal government but one of the criteria is that there has to be some hope of success even with the program and so basically it’s a longer term analysis of the cash flow.
We’re trying to take a longer term look at the prices and the costs.
We can’t base it on what’s happened over the past couple of years so, based on that criteria, we’ve been starting to move the applications through.
For our existing customers it doesn’t take that much time to get it out the door because most of their legal and administration stuff is set up.
We’re getting quite a few new customers from other financial institutions applying and in those cases we’re starting from scratch and there’s legal work to do and that sort of thing but it’ll go as quick as we can get it out.
Lemoine says interest rates are based on past performance and repayment history and have ranged from three and a quarter to as high as seven percent averaging from four to five percent.
He points out, even prior to the introduction of the new program, FCC had been working with clients in the pork industry and over the past two years had adjusted payment schedules on about 20 percent of existing loans.
Source: Farmscape.Ca
