Canada Small Business Financing Regulations (SOR/99-141)

Regulations are current to 2017-11-20 and last amended on 2016-02-19. Previous Versions

Canada Small Business Financing Regulations

SOR/99-141

CANADA SMALL BUSINESS FINANCING ACT

Registration 1999-03-18

Canada Small Business Financing Regulations

P.C. 1999-473  1999-03-18

Whereas, pursuant to subsection 14(3) of the Canada Small Business Financing ActFootnote a, the Minister of Industry had a copy of the proposed Canada Small Business Financing Regulations, substantially in the annexed form, laid before the House of Commons on March 10, 1999 and laid before the Senate on March 11, 1999;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister for the purposes of the Atlantic Canada Opportunities Agency Act, the Minister of Western Economic Diversification, the Minister of Industry and the Minister of Finance, pursuant to section 14 of the Canada Small Business Financing Acta, hereby makes the annexed Canada Small Business Financing Regulations.

Interpretation

  •  (1) The definitions in this subsection apply in these Regulations.

    Act

    Act means the Canada Small Business Financing Act. (Loi)

    borrower

    borrower means a person who carries on or is about to carry on a small business to whom a loan has been made under the Act. It does not include Her Majesty or an agent of Her Majesty in right of Canada or a province, a municipality or a municipal or other public body that performs a function of government. (emprunteur)

    conventional loan

    conventional loan means a loan that is not subject to the Act. (prêt ordinaire)

    equipment

    equipment means equipment that is used or to be used in the course of carrying on a small business, and includes computer software, any ship, boat or other vessel used or to be used in navigation and water supply systems. It does not include inventory of the small business except inventory that is leased by the borrower to the borrower’s customers. (matériel)

    going concern

    going concern means a small business that has carried on operations at any time within 60 days prior to purchase or, in the case of a small business that operates on a seasonal basis, during the season prior to purchase. (entreprise en exploitation)

    health care industry

    health care industry means a small business classified under the heading Major Group 86 - Health and Social Service Industries, of the Standard Industrial Classification, 1980 published by Statistics Canada. (industrie des soins médicaux)

    hospitality industry

    hospitality industry means a small business classified under the headings Major Group 91 - Accommodation Service Industries, and Major Group 92 - Food and Beverage Service Industries, of the Standard Industrial Classification, 1980 published by Statistics Canada. (industrie hôtelière)

    improvement

    improvement includes construction, renovation and modernization and, with respect to equipment, installation. (amélioration)

    loan agreement

    loan agreement means any document described in section 10. (contrat de prêt)

    loan term

    loan term means the period set out in a loan agreement for repayment of the total amount of the loan. (durée du prêt)

    mini-storage industry

    mini-storage industry means a small business classified under the heading 479 - Other Storage and Warehousing Industries, of the Standard Industrial Classification, 1980 published by Statistics Canada. (industrie du mini-entreposage)

    responsible officer of the lender

    responsible officer of the lender[Repealed, SOR/2009-102, s. 1]

  • (2) Whether persons are at arm’s length from each other must, for the purposes of these Regulations, be determined in accordance with the Income Tax Act.

  • (3) For the purposes of these Regulations, a loan is considered to have been made on the day on which the first disbursement of funds is made by the lender.

  • SOR/2009-102, s. 1;
  • SOR/2014-7, s. 1(F).
  •  (1) For the purposes of subsections 4(3) and 7(2) of the Act, borrowers are related when one borrower

    • (a) controls, directly or indirectly in any manner, the other borrower;

    • (b) is controlled, directly or indirectly in any manner, by the same person or group of persons as the other borrower;

    • (c) carries on their small business in partnership with the other borrower, which carries on another small business; or

    • (d) shares management services, administrative services, equipment, facilities or overhead expenses of the business with the other borrower, but is not in partnership with that borrower.

  • (2) For the purpose of subsection (1), “borrower” includes a person to whom a guaranteed business improvement loan was made under the Small Business Loans Act, if that loan is outstanding.

  • (3) For the purpose of subsection (1), control means to hold shares of a corporation to which are attached more than 50% of the votes that are necessary to elect a majority of its directors.

  • (4) Despite subsection (1), borrowers whose businesses are located at different premises are not related if neither borrower derives more than 25% of their actual or projected gross revenues from the other.

  • SOR/2009-102, s. 2.

Loan Registration

  •  (1) A loan must be registered, subject to subsection (2), within three months after the day on which the loan is made.

  • (2) If subsection (1) is not complied with and the non-compliance is inadvertent, the Minister must extend the period within which that subsection must be complied with by a period of three months.

  • SOR/2009-102, s. 24(F);
  • SOR/2014-7, s. 2(F).
  •  (1) A loan registration form must be signed by the borrower and the lender and contain the following information:

    • (a) the borrower’s name and the civic address and telephone number of the small business;

    • (a.1) the names of the borrower’s shareholders and the names of the guarantors or suretyships referred to in sections 19 and 20;

    • (b) the day on which the loan was made;

    • (c) a statement setting out separately

      • (i) the total amount of the loan,

      • (ii) the estimated amount of the loan allocated to each class of loans referred to in paragraphs 5(1)(a) to (c), and

      • (iii) the amount of the loan allocated to the class of loan referred to in paragraph 5(1)(d);

    • (d) the total estimated cost of the purchase or improvement to be financed by the loan;

    • (e) [Repealed, SOR/2009-102, s. 3]

    • (f) the lender’s acknowledgement that the lender has not charged the borrower any fees or charges other than those authorized by the Act and these Regulations;

    • (g) the borrower’s consent to

      • (i) the Minister’s audit of the loan approval and administration file held by the lender in respect of the loan, and

      • (ii) the release, by the Minister, of information with respect to the borrower’s outstanding loans, to another lender to whom the borrower applies for a loan;

    • (h) the lender’s acknowledgement that, before making the loan, it verified within the branch where the loan was to be made or, if it has no branches, within its organization, that the outstanding loan amount in relation to the borrower does not exceed the applicable limit referred to in paragraph 4(2)(d) of the Act;

    • (i) the borrower’s acknowledgement that the outstanding loan amount in relation to the borrower does not exceed the applicable limit referred to in paragraph 4(2)(d) of the Act;

    • (j) the borrower’s acknowledgement that the making of the loan is not prohibited by any of subsections 5(2), (4) or (6);

    • (k) the lender’s acknowledgement that, before approving the loan, the lender acted in accordance with the due diligence requirements referred to in section 8.

    • (l) [Repealed, SOR/2016-18, s. 1]

  • (2) If a loan registration form is transmitted by electronic means, it must include the electronic signature of the lender and contain the information set out in paragraphs (1)(a) to (l) and the following:

    • (a) the borrower’s acknowledgement that the lender is authorized to transmit electronically the information contained in the form on behalf of the borrower and that the borrower has signed a copy of the form; and

    • (b) the lender’s acknowledgement that it will keep a copy of the form that is signed by the borrower on file.

  • (3) For the purposes of subsection (2), electronic signature has the same meaning as in subsection 31(1) of the Personal Information Protection and Electronic Documents Act.

  • (4) A loan registration form must not be transmitted by electronic means unless it is transmitted through a designated secure electronic registration system.

  • (5) and (6) [Repealed, SOR/2009-102, s. 3]

  • SOR/2009-102, s. 3;
  • SOR/2014-7, ss. 3, 28(F);
  • SOR/2016-18, s. 1.
 
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