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

Regulations are current to 2014-09-15 and last amended on 2014-04-01. Previous Versions

AMALGAMATION OF LENDERS AND OTHER ACTIONS RELATING TO LENDING

  •  (1) Before undertaking any of the following actions, the lender must notify the Minister in writing of their intention to undertake the action and of the day on which it is to take effect:

    • (a) a lender amalgamates with another lender;

    • (b) a lender acquires the lending business of another lender;

    • (c) a lender discontinues its commercial lending business and sells all of its outstanding loans to another lender; and

    • (d) a lender closes a branch and sells that branch’s outstanding loans to another lender.

  • (2) When an action set out in paragraph (1)(a) takes effect, the Minister’s liability under the Act in respect of losses sustained by the amalgamating lenders as a result of loans made by them continues in respect of losses sustained by the new lender as a result of those loans and

    • (a) the loans made by the amalgamating lenders are considered to have been made by the new lender;

    • (b) the amount already paid by the Minister in respect of those loans to the amalgamating lenders as a result of the Minister’s liability under subsection 6(2) of the Act is considered to have been paid to the new lender; and

    • (c) if, as a result of the amalgamation, the amount already paid by the Minister to the amalgamating lenders as a result of the Minister’s liability under subsection 6(2) of the Act is greater than the Minister’s liability with respect to the new lender, the Minister’s liability is considered to be equal to the amount already paid.

  • (3) When an action set out in any of paragraphs (1)(b) to (d) takes effect, the Minister’s liability under the Act continues in respect of losses sustained by the transferee lender as a result of those loans and

    • (a) the Minister’s liability under the Act in respect of losses sustained by the transferor as a result of loans made by them continues in respect of losses sustained by the transferee;

    • (b) the loans made by the transferor are considered to have been made by the transferee;

    • (c) the amount already paid by the Minister in respect of those loans to the transferor as a result of the Minister’s liability under subsection 6(2) of the Act is considered to have been paid to the transferee; and

    • (d) if, as a result of the transfer, the amount already paid by the Minister to the transferor and transferee as a result of the Minister’s liability under subsection 6(2) of the Act is greater than the Minister’s liability with respect to the transferee, the Minister’s liability is considered to be equal to the amount already paid.

  • SOR/2014-7, s. 19.

 [Repealed, SOR/2014-7, s. 20]

TRANSFER OF LOANS BETWEEN BORROWERS

  •  (1) On the sale of all assets of a small business whose purchase or improvement is being financed by a loan, the borrower may be released by the lender from, and the purchaser may assume, liability in respect of the loan if

    • (a) the purchaser is approved by the lender as a borrower in accordance with the due diligence requirements referred to in section 8 and the outstanding loan amount is not greater than the limits referred to in paragraph 4(2)(c) of the Act;

    • (b) security of the same rank is maintained or taken by the lender on the assets that were used to secure the loan; and

    • (c) a guarantee or suretyship referred to in section 19 taken with respect to the loan is replaced with another guarantee or suretyship in accordance with that section of an equal or greater value.

  • (2) On a change of partners in a partnership, an outgoing partner may be released from, and a new partner may assume, liability in respect of a loan if

    • (a) the new partner is approved by the lender as a borrower in accordance with the due diligence requirements referred to in section 8 and the outstanding loan amount is not greater than the limits referred to in paragraph 4(2)(c) of the Act;

    • (b) security of the same rank is maintained or taken by the lender on the assets that were used to secure the loan; and

    • (c) a guarantee or suretyship referred to in section 19 given with respect to the loan is replaced with another guarantee or suretyship in accordance with that section for an equal or greater value.

  • (3) On leaving a partnership, an outgoing partner who is not being replaced with a new partner may be released from liability in respect of a loan if

    • (a) the remaining partners are approved by the lender as borrowers in accordance with the due diligence requirements referred to in section 8 and the outstanding loan amount is not greater than the limits referred to in paragraph 4(2)(c) of the Act;

    • (b) security of the same rank is maintained or taken by the lender on the assets that were used to secure the loan; and

    • (c) a guarantee or suretyship referred to in section 19 given with respect to the loan is replaced with another guarantee or suretyship in accordance with that section for an equal or greater value.

  • SOR/2014-7, s. 21.