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

Regulations are current to 2017-10-13 and last amended on 2016-02-19. Previous Versions

 If the non-compliance described in any of the following paragraphs was inadvertent, the Minister must pay the lender the amount of any loss, calculated in accordance with subsection 38(7), on the portion of the amount of principal outstanding on the loan to which the non-compliance does not relate:

  • (a) the loan was made to finance a purchase or improvement that does not fall within the scope of a class of loan referred to in subsection 5(1) or that is not permitted under subsection 6(1);

  • (b) the conditions set out in subsection 5(3) were not satisfied in respect of a loan that included the cost of decontamination of real property or immovables;

  • (c) [Repealed, SOR/2009-102, s. 15]

  • (d) the requirements with respect to security set out in these Regulations were not satisfied in respect of the loan; or

  • (e) the lender has not provided all of the documentation described in subsection 38(4) in respect of a claim for the loss.

  • SOR/2009-102, ss. 15, 25(F);
  • SOR/2014-7, s. 13;
  • SOR/2016-18, s. 5.
  •  (1) Despite the fact that the requirements with respect to appraisals set out in section 9 or subsection 16(2) have not been satisfied in respect of a loan, the Minister must pay the lender the amount of any loss, calculated in accordance with subsection 38(7), sustained in respect of the loan if

    • (a) the non-compliance was inadvertent; and

    • (b) the lender provides the Minister with documentation that substantiates the value of the assets or services intended to improve the assets, as the case may be, during the period of 180 days before the loan was approved by the lender or on the day the loan was approved.

  • (2) Subsection (1) does not apply to appraisals of real property or immovables.

  • (3) Despite the fact that the lender has not provided the documentation referred to in paragraph (1)(b), the Minister must pay the lender the amount of any loss, calculated in accordance with subsection 38(7), on the portion of the amount of principal outstanding on the loan to which the non-compliance does not relate.

  • SOR/2009-102, s. 16;
  • SOR/2014-7, s. 14.

 Despite the fact that a loan agreement does not contain all of the terms described in section 10, the Minister must pay the lender the amount of any loss, calculated in accordance with subsection 38(7), sustained in respect of the loan if

  • (a) the non-compliance was inadvertent; and

  • (b) the lender provides the Minister with documentation substantiating the missing terms.

  • SOR/2009-102, s. 16;
  • SOR/2014-7, s. 15(F).

 Despite the fact that the primary security taken by the lender is not enforceable, the Minister must pay the lender the amount of any loss resulting from the loan, calculated in accordance with subsection 38(7), on the portion of the amount of principal outstanding on the loan to which the non-compliance relates if

  • (a) the non-compliance was inadvertent;

  • (b) the requirements set out in section 14 with respect to the validity and ranking of the security are complied with; and

  • (c) the lender provides the Minister with documentation that substantiates the following:

    • (i) the lender, or their agent or mandatary, performed, during the period beginning on the day on which the loan was approved and ending 90 days after the final disbursement under the loan agreement, an on-site visit of the premises where the borrower’s small business is carried on or about to be carried on, and

    • (ii) the lender, or their agent or mandatary, confirmed that the assets for which the loan under subsection 5(1) was approved were delivered to and, if required, installed at the premises where the borrower’s small business is carried on or about to be carried on at the time of the on-site visit.

  • SOR/2014-7, s. 16.

 If the non-compliance was inadvertent with respect to an outstanding loan amount referred to in any of paragraphs 4(2)(b) to (d) of the Act, the Minister must pay the lender the amount of any loss, calculated in accordance with subsection 38(7), on the portion of the amount of the principal outstanding on the loan to which the non-compliance does not relate.

  • SOR/2014-7, s. 16;
  • SOR/2016-18, s. 6.
  •  (1) Subject to subsection (3), in the case where the requirements with respect to guarantees and suretyships set out in sections 19 to 22 were not satisfied in respect of a loan made before April 1, 2014, the Minister must pay the lender the amount of any loss resulting from the loan, calculated in accordance with subsection 38(7) if

    • (a) the loss was not affected by the non-compliance and the non-compliance was inadvertent; and

    • (b) the aggregate amount recovered from the realization of personal guarantees and suretyships, if any, is not greater than the sum of

      • (i) 25% of the original amount of the loan,

      • (ii) interest on any judgment against the guarantor or surety,

      • (iii) taxed costs for, or incidental to, the legal proceedings against the guarantor or surety, and

      • (iv) legal fees and disbursements — other than costs referred to in subparagraph (iii) — and other costs incurred by the lender for services rendered to it by persons other than its employees for the purpose of the legal proceedings against the guarantor or surety.

  • (2) Subject to subsection (3), in the case where the requirements with respect to guarantees and suretyships set out in sections 19 to 22 were inadvertently not satisfied in respect of a loan made after March 31, 2014, the Minister must pay the lender the amount of any loss resulting from the loan, calculated in accordance with subsection 38(7), less the guarantee and suretyship taken but not realized due to the non-compliance.

  • (3) In the case where the lender has taken a secured personal guarantee or suretyship, the Minister must pay the lender the amount of any loss resulting from the loan calculated in accordance with subsection 38(7) if

    • (a) the lender has inadvertently taken a secured guarantee or suretyship; and

    • (b) the lender has not realized on, and has released, the security on the guarantee or suretyship.

  • SOR/2009-102, s. 24(F);
  • SOR/2014-7, s. 16.
  •  (1) If the conditions set out in subsection (2) have been met, the Minister must pay the lender the amount of any loss, calculated in accordance with subsection 38(7), sustained in respect of a loan despite any of the following non-compliances:

    • (a) [Repealed, SOR/2009-102, s. 17]

    • (b) a fee or charge is payable, other than a fee or charge referred to in section 10 of the Act;

    • (c) the rate of interest payable in respect of the loan is greater than the rate provided by section 12;

    • (d) a charge or premium referred to in paragraph 13(1)(a) or (b) is combined with the rate of interest payable in respect of the loan, when the charge or premium is expressed as a percentage of the outstanding amount of the loan and when the percentage that is attributable to the charge or premium is not clearly set out in the loan agreement;

    • (e) the costs required to convert the loan into a fixed rate or variable rate loan or for the prepayment of all or part of the loan exceed the costs that the lender would impose if it were a loan of the same amount; or

    • (f) costs are charged that are not imposed on an ordinary loan of the same amount or that exceed the costs that would be imposed on an ordinary loan of the same amount.

  • (2) The Minister must make a payment to a lender under subsection (1) if

    • (a) the loss was not affected by the non-compliance and the non-compliance was inadvertent;

    • (b) the lender has reimbursed the borrower for any resultant overcharges, unless the lender has provided the Minister with documentation that substantiates the fact that it is unable to locate the borrower; and

    • (c) the lender has otherwise remedied the non-compliance.

  • SOR/2009-102, ss. 17, 24(F);
  • SOR/2014-7, s. 17.

 Notwithstanding section 35, if a lender does not provide a report as required by section 34 until after the time required by that section and the non-compliance was inadvertent, the Minister, after receiving the report, must pay to the lender the amount of any loss, calculated in accordance with subsection 38(7), sustained in respect of the loan or loans to which the report relates.

  • SOR/2009-102, s. 24(F).
 
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