6. A loan, other than a loan made under section 30, is subject to the following conditions:

• (a) it may not be made to finance an expenditure or commitment that arose more than 180 days before the day on which the loan is approved or that was previously financed by a term loan; and

• (b) the loan term shall not be longer than a period of 10 years beginning on the day on which the first payment of principal and interest is due.

7. The Minister is authorized to designate organizations as lenders.

7.1 For the purpose of subparagraph (a)(ii) of the definition “lender” in section 2 of the Act, the member shall provide the Minister with the following:

• (a) the number assigned to them by the Canadian Payments Association; and

• (b) their external auditor’s certificate stating that the member has been a commercial lender for the past five years.

8. In making and administering a loan, the lender must apply the same procedures as those that would be applied in respect of a conventional loan in the same amount, including, before making the loan,

• (a) obtaining credit references or conducting a credit check on the borrower and any persons who are legally or financially responsible for the borrower; and

• (b) completing an assessment of the repayment ability of the borrower, taking into account all other financial obligations of the borrower.

• 9. (1) The borrower must, before the loan is approved, provide to the lender from, subject to subsection (2), an appraiser who is a member of any professional association that is recognized under a federal or provincial law and who is at arm’s length from the borrower, and, in the case of assets described in paragraph (c), from the lender, an appraisal, made at any time within 180 days before the loan is approved, of the value of the assets if a borrower uses, or intends to use, all or part of a loan to purchase

  • (a) assets from a person who is not at arm’s length from the borrower;

  • (b) all or substantially all of the assets of a going concern; or

  • (c) assets from the lender or its representative that, at the time of purchase, are being or had been used to secure a conventional loan of the lender.

• (2) In the case of a loan to purchase equipment or leasehold improvements, if there is no professional association referred to in subsection (1) whose members are qualified to conduct such an appraisal, the appraisal must be made by an appraiser who is at arm’s length from the borrower and, in the case of equipment or leasehold improvements that are assets referred to in paragraph (1)(c), the lender.

• (3) The borrower must, before the loan is approved, provide to the lender from an appraiser who is a member of any professional association referred to in subsection (1) and who is at arm’s length from the borrower, an appraisal, made at any time within 180 days before the loan is approved, of the estimated value of the improved asset if

  • (a) the borrower uses, or intends to use, all or part of the loan to improve an asset;

  • (b) the estimated cost of the services required to improve the asset represents all or substantially all of the estimated value of the improved asset; and

  • (c) the services are to be provided by a person who is not at arm’s length from the borrower.

• (4) If an appraisal is required, the amount of the loan must be based on the lesser of

  • (a) the cost of purchasing or improving the asset or both, and

  • (b) the appraised value of the asset or improved asset.