The Farm Credit Corporation is offering farmers loans of
up to $500,000 flowing from the federal government's COVID-19 response.
Be cautious!
FCC president Michael Hoffert said in a letter to farmers "It is a 24-month credit line up to $500,000 at a rate of prime plus one per cent and no fees. The loan is secured by general security agreements or universal movable hypothec (Québec only)."
It's the security that should give farmers pause.
In effect, you are putting everything you own on the line.
But this is not really all that new. I have been told that the FCC has been doing this on many mortgages and loans, even for amounts that are a small fraction of the value of the assets they are asked to pledge - eg. a $250,000 loan on a farm with total assets of a million or more.
The FCC can, I have been told, then turn around and claim that entire pledged amount as its own security when it is trying to raise funds in the open market.
So, if the FCC should ever default, guess whose assets are at risk. Yours! All of them.
Be cautious. Have a lawyer or accountant check it out for you before you sign up for FCC loans.
