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

Regulations are current to 2022-11-16 and last amended on 2022-07-04. Previous Versions

  •  (1) A loan must fall within one of the following prescribed classes:

    • (a) loans to finance the purchase or improvement of real property or immovables of which the borrower is or will become the owner, if the purchase or improvement is necessary for the operation of the borrower’s small business;

    • (b) loans to finance the purchase of leasehold improvements to real property or immovables of which the borrower is or will become the tenant or the improvement of such real property or immovables, if the purchase or improvement is necessary for the operation of the borrower’s small business;

    • (c) loans to finance the purchase or improvement of equipment necessary for the operation of the borrower’s small business;

    • (d) loans to finance the purchase of intangible assets and working capital costs;

    • (e) lines of credit for working capital costs; or

    • (f) loans to finance the payment by the borrower of registration fees payable in respect of a loan referred to in any of paragraphs (a) to (e).

  • (2) A loan referred to in paragraph (1)(a) may not be made for the purchase of real property or immovables unless, at the time the loan is approved by the lender,

    • (a) at least 50% of the area of the real property or immovables is used for the operation of the small business or is intended to be so used within 90 days after the final disbursement under the loan agreement; and

    • (b) that portion of the area is not intended to be used within three years after the day on which the loan is made for

      • (i) resale, or

      • (ii) leasing or subleasing, except in the case of a small business in the health care industry, hospitality industry or mini-storage industry.

  • (3) A loan referred to in paragraph (1)(a) for the purchase of real property or immovables may include the cost of decontamination of real property or immovables if

    • (a) the decontamination is required under a federal or provincial law, and the decontamination plan is disclosed to the lender on or before the day on which the loan is made; and

    • (b) the loan is secured by a first mortgage on the real property or immovables.

  • (4) A loan referred to in paragraph (1)(b) may not be made if the real property or immovables are intended to be used within three years after the day on which the loan is made for subleasing except in the case of a small business in the health care industry, hospitality industry or mini-storage industry.

  • (5) The cost of purchasing or improving the equipment, real property, immovables or leasehold improvements financed by a loan referred to in any of paragraphs (1)(a) to (c) must not include the cost of labour provided by the borrower or the borrower’s employees but may include the cost of labour provided by any subcontractor.

  • (6) A loan referred to in any of paragraphs (1)(a) to (d) may not be used to finance the payment of any refundable taxes.

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