Canada Small Business Financing Regulations

1.1 (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.