Canada Small Business Financing Regulations

10 (1) On or before the day on which a loan is made, the lender and borrower must sign a document that sets out the principal amount of the loan, the rate of interest payable in respect of the loan, the repayment terms, the frequency of payments of principal and interest and the day on which the first payment of principal and interest is due.

(2) The lender and the borrower may, at any time, agree to amend the terms of the loan or, at the end of a loan term, to renew the loan, to an aggregate maximum term of 15 years for a loan referred to in any of paragraphs 5(1)(a) to (d), beginning on the day on which the first payment of principal and interest is due.

(3) On or before the day on which a loan is renewed or its terms are amended, the lender and borrower must sign a document that sets out the terms of the renewal or amendment.

(4) For greater certainty, the terms described in subsections (1) and (3) may be set out in more than one document, as long as each document is signed by the lender and the borrower.

(5) The repayment terms must provide that

• (a) the loan is payable by instalments;

• (b) at least one instalment of principal and interest is payable annually; and

• (c) the first instalment of principal and interest is payable no later than one year after the day on which the loan is made.

(6) Before the end of the five year period that begins the day after a loan referred to in paragraph 5(1)(e) is opened, the lender and the borrower may

• (a) submit a new registration under section 2 for an additional five year term, along with the registration fee under subsection 4(1.1), if the additional five year term begins within five years after the day on which the line of credit is opened;

• (b) convert the line of credit to a loan that meets the requirements of subsections (1) and (3) to (5), with a maximum loan term of 10 years; or

• (c) enter into an agreement to repay the balance of the line of credit with a conventional loan.