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Small Businesses Loans Regulations (C.R.C., c. 1501)

Regulations are current to 2024-03-06

Small Businesses Loans Regulations

C.R.C., c. 1501

CANADA SMALL BUSINESS FINANCING ACT

Regulations Respecting Loans under the Small Businesses Loans Act

Short Title

 These Regulations may be cited as the Small Businesses Loans Regulations.

Interpretation

 In these Regulations,

Act

Act means the Small Businesses Loans Act. (Loi)

averaging period

averaging period[Repealed, SOR/78-140, s. 1]

interest period

interest period[Repealed, SOR/78-140, s. 1]

  • SOR/78-140, s. 1

 For the purposes of the Act and these Regulations,

communications

communications means the business of radio and television broadcasting and the furnishing of community antenna services, telephone services and other electrical or electronic communication services; (communications)

construction

construction means the business of building and other construction and, without limiting the generality of the foregoing, includes general contracting, subcontracting, special trade contracting and the making of alterations and repairs; (construction)

fishing

fishing means the business of fishing by catching, gathering, trapping or harvesting fish inclusive of finfish, shellfish, crustaceans and all forms of aquatic life whether animal or vegetable and, without limiting the generality of the foregoing, includes all the establishments specified in section 031 — Fishing Industries — of the 1980 edition of the Standard Industrial Classification published by Statistics Canada; (la pêche)

manufacturing

manufacturing means the business of manufacturing or producing by hand, art, process or mechanical means any goods, wares or merchandise and, without limiting the generality of the foregoing, includes the business of repairing any goods, wares or merchandise; (fabrication)

responsible officer of the lender

responsible officer of the lender means

  • (a) the manager or assistant manager of the lender or a branch thereof,

  • (b) the person for the time being acting as the manager or assistant manager of the lender or a branch thereof,

  • (c) the credit committee of the lender or a branch thereof, or

  • (d) any person duly authorized by the lender to supervise the granting of loans; (fonctionnaire responsable du prêteur)

retail trade

retail trade means the business of purchasing any goods, wares or merchandise for resale to the public for personal or household use or consumption; (commerce de détail)

service business

service business means the business of providing services of any nature or kind to other business enterprises or to the public including insurance and real estate agencies; (entreprises de services)

transportation

transportation means the business of transporting persons or things; (transports)

wholesale trade

wholesale trade means the business of purchasing any goods, wares or merchandise for resale otherwise than to the public for personal or household use or consumption. (commerce de gros)

  • SOR/78-140, s. 2
  • SOR/87-591, s. 1
  • SOR/92-220, s. 13

Application

 These Regulations apply to a guaranteed business improvement loan authorized under the Act and made before April 1, 1993.

  • SOR/93-168, s. 1

 The definition equipment in section 2 of the Act includes

  • (a) computer software;

  • (b) any ship, boat or other vessel used or designed to be used in navigation;

  • (c) piers, skidways, stages and wharves; and

  • (d) any type of water supply system.

  • SOR/87-591, s. 2
  • SOR/92-220, s. 14(F)

Classes of Businesses

 These Regulations do not apply to any business or enterprise that is

  • (a) not included in the definition business enterprise contained in section 2 of the Act;

  • (b) eligible to apply for and receive a guaranteed farm improvement loan under the Farm Improvement Loans Act or a guaranteed loan under the Fisheries Improvement Loans Act;

  • (c) primarily engaged in the mining of metals, minerals and non-metallic materials or in the production of petroleum or natural gas from wells or other deposits; or

  • (d) primarily engaged in the financial, insurance or real estate business other than those defined as a service business.

  • SOR/78-140, s. 3

Fiscal Period Determined

 Where the fiscal period of a business enterprise is less than 365 days, the fiscal period thereof shall, for the purposes of the Act and these Regulations, be deemed to commence on the first day of the fiscal period of that business enterprise and end not less than 52 weeks after its commencement.

Application for Loan

 Every applicant for a loan shall submit to the lender a signed application, in the form set out in Schedule I, containing the required information.

  • SOR/92-220, s. 13

Classes of Guaranteed Business Improvement Loans

 The following are the classes of loans prescribed for the purposes of the Act and these Regulations:

  • (a) fixed equipment loans being loans made for the purpose of financing the purchase, installation, renovation, improvement or modernization of equipment of a kind usually affixed to real or immovable property;

  • (b) movable equipment loans, being loans made for the purpose of financing the purchase, renovation, improvement or modernization of equipment of a kind not usually affixed to real or immovable property;

  • (c) premises loans, being loans made for the purpose of financing

    • (i) the renovation, improvement, modernization or extension of premises, or

    • (ii) the construction or purchase of premises; and

  • (d) land loans, being loans made for the purpose of financing the purchase of land necessary for the operation of a business enterprise.

  • SOR/92-220, s. 14(F)

Fixed Equipment Loans

[
  • SOR/92-220, s. 14(F)
]

 Subject to the Act and these Regulations, a fixed equipment loan is a guaranteed business improvement loan if

  • (a) the loan is made to a proprietor who is the owner or the tenant of the premises or land to which the equipment described in the application is affixed or on which the equipment is to be placed;

  • (b) the loan is made in an amount not exceeding the greater of

    • (i) 80 per cent of the estimated cost of the purchase, installation, renovation, improvement or modernization of the equipment, excluding the cost of any labour of the borrower, as set out in the application for the loan, and

    • (ii) 80 per cent of the actual cost of the purchase, installation, renovation, improvement or modernization of the equipment, excluding the cost of any labour of the borrower, as evidenced by substantiating documentation; and

  • (c) the lender has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/85-396, s. 1
  • SOR/87-591, s. 3
  • SOR/92-220, ss. 1, 13 and 14(F)

Movable Equipment Loans

[
  • SOR/92-220, s. 14(F)
]

 Subject to the Act and these Regulations, a movable equipment loan is a guaranteed business improvement loan if

  • (a) the loan is made in an amount not exceeding the greater of

    • (i) 80 per cent of the estimated cost of the purchase, renovation, improvement or modernization of the equipment, as set out in the application for the loan, and

    • (ii) 80 per cent of the actual cost of the purchase, renovation, improvement or modernization of the equipment, as evidenced by substantiating documentation; and

  • (b) the lender has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/85-396, s. 2
  • SOR/87-591, s. 4
  • SOR/92-220, ss. 2, 13 and 14(F)

Premises Loans

 Subject to the Act and these Regulations, a premises loan is a guaranteed business improvement loan if

  • (a) the loan is made to a proprietor who

    • (i) in the case of a loan made for the purpose of financing the renovation, improvement, modernization or extension of premises, is the owner or tenant of the premises in respect of which the proceeds of the loan are to be expended, or

    • (ii) in the case of a loan made for the purpose of financing the construction or purchase of premises, is an owner or a person who will become an owner through purchase or construction of the premises in respect of which the proceeds of the loan are to be expended;

  • (b) the loan is made in an amount not exceeding the greater of

    • (i) 90 per cent of the estimated cost of the renovation, improvement, modernization, extension, construction or purchase of any building or other structure, excluding the cost of any labour of the borrower, as set out in the application for the loan, and

    • (ii) 90 per cent of the actual cost of the renovation, improvement, modernization, extension, construction or purchase of any building or other structure, excluding the cost of any labour of the borrower, as evidenced by substantiating documentation; and

  • (c) the lender has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/85-396, s. 3
  • SOR/87-591, s. 5
  • SOR/92-220, ss. 3, 13

Land Loans

 Subject to the Act and these Regulations, a land loan is a guaranteed business improvement loan if

  • (a) the loan is made in an amount not exceeding the greater of

    • (i) 90 per cent of the estimated cost of the purchase of the land, including any building or other structure on the land, as set out in the application for the loan, and

    • (ii) 90 per cent of the actual cost of the purchase of the land, including any building or other structure on the land, as evidenced by substantiating documentation; and

  • (b) the lender has required, in accordance with normal banking requirements, and the borrower has provided evidence that the funds advanced in respect of the loan were expended for the purpose set out in the application for the loan.

  • SOR/85-396, s. 4
  • SOR/87-591, s. 6
  • SOR/92-220, ss. 4, 13

Security

  •  (1) A lender shall, at the time of making a loan of any prescribed class, acquire and perfect security for the repayment thereof by way of a security interest, in a form consistent with normal banking practice, in the fixed equipment, movable equipment, premises or land, as the case may be, in respect of which the funds advanced are to be expended.

  • (1.1) Where a premises loan is made to a proprietor who is a tenant of the premises, a lender may, in lieu of the security referred to in subsection (1), acquire and perfect alternate security.

  • (1.2) Subsections (1) or (1.1), as the case may be, apply in respect of a loan even if normal banking practices would not require a lender to take any security for the loan.

  • (2) A lender may release any security acquired in respect of a loan pursuant to subsections (1) or (1.1), as the case may be, but shall, throughout the term of the loan remaining after such release, maintain adequate security in accordance with normal banking practice for the repayment of the balance of the loan outstanding at any time.

  • (3) A lender may acquire security for the repayment of a loan in addition to the security referred to in subsection (1), (1.1) or (2).

  • (4) Every lender shall, at the time of making a loan, require the borrower to give to the lender, in addition to any security referred to in subsection (1) or (1.1), a written promise to repay the loan signed by the borrower and setting out the principal amount of the loan, the basis for establishing the rate of interest which shall not exceed the applicable maximum rate prescribed by section 15, and the repayment terms not inconsistent with those set out in paragraph 3(2)(e) of the Act and in subsection 14(1).

  • SOR/78-140, s. 4
  • SOR/79-151, s. 1
  • SOR/85-396, s. 5
  • SOR/87-591, s. 7
  • SOR/92-220, ss. 5, 13 and 14(F)

Loan Terms and Revision of Loan Terms

  •  (1) Repayment of a loan is required to be made in instalments that are payable at least annually but, at the option of the lender, repayments may be scheduled more frequently than annually.

  • (1.1) Where a loan is advanced in more than one disbursement, repayment of the first principal instalment shall be scheduled not later than one year from the date of the initial disbursement under the loan.

  • (2) Subject to paragraph 3(2)(e) of the Act, the terms for repayment of a loan shall be set out in the agreement in connection with the loan and the repayment period and the amount and frequency of instalment payments shall conform to the ability of the borrower to pay, having regard to the kind of business enterprise carried on, the relevant business practices and conditions, the repayment of other obligations and to any other relevant circumstances.

  • (3) Where a borrower is in default in respect of the repayment of a loan or advises the lender that some of the terms of the agreement in connection with the loan are such that he may have to default, or where a borrower wishes to take out additional loans, and the lender is of the opinion that it would be appropriate in the light of the borrower’s total repayment obligations to alter or revise the terms of the loan or any agreement in connection therewith, the lender may, with the approval of the borrower, alter or revise the terms of the loan or agreement by

    • (a) extending the term for repayment of the loan within the maximum terms specified in the Act;

    • (b) changing the amount of the periodic instalments; or

    • (c) changing the periods between instalments, but in no case shall instalments be due less frequently than annually.

  • (4) Where, in the circumstances described in subsection (3), the borrower and the lender agree to alter or revise the repayment terms of a loan and that agreement would result in longer terms for repayment than those authorized under paragraph 3(2)(e) of the Act, it is a condition of the Minister’s liability with respect to the loan that the alteration or revision has been given the prior written approval of the Minister.

  • (5) [Repealed, SOR/92-220, s. 6]

  • (6) [Repealed, SOR/87-591, s. 8]

  • SOR/78-140, s. 5
  • SOR/87-591, s. 8
  • SOR/92-220, ss. 6, 13

Rate of Interest

 The maximum rate of interest per annum payable, as set out in the written promise to repay, to a lender in respect of a loan shall be the aggregate of one per cent per annum and

  • (a) in the case of a lender incorporated by or under the provisions of the Bank Act or established pursuant to the Treasury Branches Act of Alberta, the prime lending rate, as fixed daily during the term of the loan, of that lender;

  • (b) in the case of a lender that is a credit union, caisse populaire or other cooperative credit society and that is designated by the Minister as a lender for the purposes of the Act, the prime lending rate, as fixed daily during the term of the loan, of any one of the following institutions that is selected by the lender when the loan is made, namely,

    • (i) any one of the lenders chartered under the Bank Act,

    • (ii) the Canadian Co-operative Credit Society,

    • (iii) la Caisse centrale Desjardins du Québec, or

    • (iv) the lender’s provincial central, federation, league or society, as the case may be; or

  • (c) in the case of a lender that is a trust, loan or insurance corporation that is designated by the Minister as a lender for the purposes of the Act, the prime lending rate, as fixed daily during the term of the loan, of any one of the lenders chartered under the Bank Act that is selected by the lender when the loan is made.

  • SOR/78-140, s. 6
  • SOR/79-151, s. 2
  • SOR/87-591, s. 9
  • SOR/92-220, s. 7

When Entire Amount Becomes Due and Payable

  •  (1) Where a borrower is in default in respect of any payment on a loan, the entire amount of the balance outstanding on the loan shall, at the option of the lender, become due and payable.

  • (2) Where a borrower is convicted of an offence under the Act, the entire amount of the balance outstanding on a loan shall become due and payable.

  • SOR/92-220, s. 13

Misrepresentation

 Where a lender discovers that any statement in an application for a loan is false in any material respect or that a borrower has used or is using the proceeds of a loan otherwise than for a purpose specified in the application for a loan, the lender may take any action it considers proper in the circumstances and shall immediately make a full report in respect of the matter to the Minister who may request the lender to take such action or further action as he may require.

  • SOR/92-220, s. 13

Procedure on Default

  •  (1) Where a borrower is in default in respect of any payment on a loan and the entire amount of the balance outstanding on the loan becomes due and payable pursuant to section 16, the lender may take such action, whether by legal proceedings or otherwise, as it considers advisable in the circumstances to

    • (a) effect collection of the loan;

    • (b) obtain additional security;

    • (c) realize upon any or all the security it has taken; or

    • (d) effect any compromise with or grant any concession to any person other than the borrower.

  • (2) Any action taken by the lender pursuant to subsection (1) shall not discharge the liability of the Minister to the lender under the Act.

  • SOR/92-220, s. 13

Procedure for Claims

  •  (1) A claim for loss by a lender in respect of a loan shall not be made to the Minister until 90 days have elapsed after the entire amount of the loan becomes due and payable.

  • (1.1) The lender shall submit any claim for loss to the Minister within 19 months after the date on which the default in repayment of the loan occurred.

  • (1.2) The Minister may, where the lender makes a request in accordance with the form set out in Schedule III, extend one or more times the period of 19 months referred to in subsection (1.1).

  • (1.3) A request for an extension of the period of 19 months referred to in subsection (1.1) shall be made before the expiration of that period or of that period as extended by the Minister, as the case may be.

  • (2) The loss sustained by a lender in respect of a loan shall be determined by aggregating the following, namely,

    • (a) the unpaid principal amount of the loan;

    • (b) interest earned on the loan over any period and outstanding at the time the claim is approved for payment by the Minister, calculated

      • (i) where the interest was earned over a period of 180 days or less, at the rate of interest referred to in subsection (2.1), or

      • (ii) where the interest was earned over a period of more than 180 days,

        • (A) at the rate of interest referred to in subparagraph (i) for the first 180 days of the period or, where in the opinion of the Minister reasons beyond the control of the lender justify calculating the interest at that rate for more than 180 days, at that rate for such greater number of days as are approved by the Minister, and

        • (B) for the remainder, if any, of the period over which the interest was earned, at a rate of interest equal to one-half of the rate of interest referred to in subparagraph (i).

    • (c) any uncollected taxed costs for or incidental to legal proceedings in respect of the loan;

    • (d) legal fees, legal costs and legal disbursements, whether taxable or not, actually incurred by the lender, with or without litigation, in collecting or endeavouring to collect the loan or in protecting the interests of the Minister but only to the extent that the Minister allows; and

    • (e) any other disbursements actually incurred by the lender in collecting or endeavouring to collect the loan or in protecting the interests of the Minister but only to the extent that the Minister allows.

  • (2.1) For the purpose of paragraph (2)(b), the rate of interest shall be fixed at a rate not exceeding the aggregate of one per cent per annum and the average of the prime lending rates in effect at the following lenders on the last day of the month preceding the month in which the interest referred to in paragraph (2)(b) commenced to be earned:

    • (a) the Bank of Montreal;

    • (b) the Canadian Imperial Bank of Commerce;

    • (c) the National Bank of Canada;

    • (d) The Bank of Nova Scotia;

    • (e) The Royal Bank of Canada; and

    • (f) The Toronto-Dominion Bank.

  • (2.2) Subject to subsection (2.3), where, in the case of any loan by a lender, the evidence submitted by the lender pursuant to paragraph (3)(c) shows that

    • (a) the actual cost of the fixed equipment, movable equipment, premises or land, as the case may be, in respect of which the loan was made was less than the estimated cost shown in the application for the loan, and the loan was made in an amount exceeding

      • (i) 80 per cent of the actual cost of the fixed equipment,

      • (ii) 80 per cent of the actual cost of the movable equipment,

      • (iii) 90 per cent of the actual cost of the premises, or

      • (iv) 90 per cent of the actual cost of the land,

      as the case may be or

    • (b) only a portion of the funds advanced by the lender in respect of the loan were expended for the purpose set out in the application for the loan,

    the loss sustained by the lender in respect of the loan shall, notwithstanding subsection (2), be determined as that proportion of the amount determined pursuant to subsection (2) that

    • (c) where paragraph (a) applies, the actual cost referred to in that paragraph is of the estimated cost referred to in that paragraph; and

    • (d) where paragraph (b) applies, the portion expended for the purpose set out in the application for the loan is of the funds advanced by the lender in respect of the loan.

  • (2.3) Where both paragraphs (2.2)(a) and (b) apply, the loss sustained by the lender is the lesser of the amounts obtained pursuant to paragraphs (2.2)(c) and (d).

  • (3) Every claim for loss shall be certified by a responsible officer of the lender and shall be accompanied by:

    • (a) evidence that the loan has been registered by the Minister;

    • (b) a copy of the borrower’s signed application form certified by a responsible officer of the lender;

    • (c) documentation substantiating

      • (i) the actual cost of the fixed equipment, movable equipment, premises or land, as the case may be, in respect of which the loan was made, and

      • (ii) the amount of the funds advanced by the lender in respect of the loan that were expended for the purpose set out in the application for the loan; and

    • (d) any additional information or documents that the Minister requires to be provided.

  • (4) A claim for loss by a lender in respect of a loan shall be approved for payment by the Minister within 60 days after receipt by the Minister of the claim for loss and all evidence, information and documents required by subsection (3) to accompany the claim for loss.

  • (5) Where a claim for loss by a lender has been paid pursuant to subsection (4), the lender shall

    • (a) acknowledge receipt of payment to the Minister in writing; and

    • (b) deal with any security held by it for the loan in such manner as the Minister may direct.

  • (6) Any expense incurred by the lender in dealing with any security pursuant to paragraph (5)(b) shall be paid by the Minister to the lender.

  • (7) [Repealed, SOR/78-140, s. 8]

  • SOR/78-140, ss. 7, 8
  • SOR/79-151, ss. 3, 4
  • SOR/85-396, s. 6
  • SOR/87-591, s. 10
  • SOR/92-220, ss. 8, 13 and 14(F)
  •  (1) When acting on behalf of the Minister, a lender shall, notwithstanding that its claim for loss in respect of a loan has been paid, take such reasonable steps as the Minister considers necessary to

    • (a) collect payments of principal and interest due by the borrower under the terms of the loan;

    • (b) realize upon any security taken under these Regulations; and

    • (c) effect a compromise with or grant a concession to any person for the purpose of the collection or realization referred to in paragraph (a) or (b), as the case may be.

  • (2) Where any amount is collected or realized by a lender pursuant to subsection (1) with respect to a loan, the lender shall forthwith remit to the Minister

    • (a) if the loan was made prior to April 1, 1985, the whole of the amount collected or realized; and

    • (b) if the loan was made after March 31, 1985, that percentage of the amount collected or realized that is applicable by virtue of paragraph 3(1)(b) of the Act.

  • (3) Any actual expenses of the lender incurred under subsection (1) shall be paid by the Minister to the lender.

  • SOR/78-140, s. 9
  • SOR/85-396, s. 7
  • SOR/87-591, s. 11
  • SOR/92-220, s. 13

Reports to Minister

 Any lender that has made a loan under these Regulations shall furnish to the Minister such reports or information as the Minister may from time to time require.

  • SOR/92-220, s. 13

Subrogation

  •  (1) Where, under the Act and these Regulations, the Minister has paid to a lender all or any of the amount of loss sustained by the lender as a result of a loan, Her Majesty is thereupon subrogated in and to all the rights of the lender in respect of that loan and, without limiting the generality of the foregoing, all rights and powers of the lender in respect of

    • (a) the loan,

    • (b) any judgment obtained by the lender in respect of the loan, and

    • (c) any security taken by the lender for the repayment of the loan,

    are thereupon vested in Her Majesty and Her Majesty is entitled to exercise all the rights, powers and privileges that the lender had or might exercise in respect of the loan, judgment or security, including the right to commence or continue any action or proceeding, to execute any release, transfer, sale or assignment, or in any way to collect, realize or enforce the loan, judgment or security.

  • (1.1) The maximum rate of interest per annum payable to Her Majesty with respect to a subrogated debt to which the subrogated rights referred to in subsection (1) relate shall be calculated for each month before the first day of the month and shall be the average of the prime lending rates in effect at the following lenders on the last day of the month preceding the month for which the rate is calculated:

    • (a) the Bank of Montreal;

    • (b) the Canadian Imperial Bank of Commerce;

    • (c) the National Bank of Canada;

    • (d) The Bank of Nova Scotia;

    • (e) The Royal Bank of Canada; and

    • (f) The Toronto-Dominion Bank.

  • (2) Where the Minister has paid to a lender less than the full amount of the loss sustained by the lender in respect of a loan and Her Majesty, by means of the exercise of any right to which Her Majesty is subrogated, recovers an amount that is greater than the costs and expenses of recovery, but that, after deducting such costs and expenses, is less than the full amount of the loss, Her Majesty is entitled to that proportion of the net amount recovered that the portion of the loss borne by Her Majesty is of the full amount of the loss and the remainder of the net amount recovered shall be paid by the Minister to the lender.

  • SOR/85-396, s. 8
  • SOR/92-220, ss. 9, 13

Registry

 The registry established by the Minister pursuant to the Small Businesses Loans Regulations, made by Order in Council P.C. 1960-1764 of December 22, 1960, for the purpose of recording loans made under the Act is hereby continued.

Charge for Insurance

  •  (1) Where a lender, under the terms of a business improvement loan or any agreement in connection therewith, pays the premium under a policy of insurance under which any amount is or may become payable to the lender, the lender may charge the amount of the premium to the borrower.

  • (2) Notwithstanding subsection (1), where the insurance premium is expressed as a percentage of the loan outstanding, it may be combined with the rate of the interest if the resultant rate of interest, as set out in the written promise to repay the loan, does not exceed the maximum rate prescribed by section 15.

  • SOR/87-591, s. 12
  • SOR/92-220, ss. 10, 13

Loan Notification and Fee Payment

  •  (1) Within a period of three months after the making of a loan by a lender,

    • (a) the lender shall present to the Minister a loan registration request in the form set out in Schedule II and containing all the required information and, pursuant to paragraph 3(4)(b) of the Act, a fee of one per cent of the amount of the loan in the form of the lender’s own remittance payable to the Receiver General; and

    • (b) the Minister shall, on receipt of the lender’s completed loan registration request and fee, register the loan as a guaranteed business improvement loan in the registry established for the purpose of recording loans made under the Act.

  • (2) Where the Minister has been unable to register the loan in circumstances where through inadvertence the lender has not within the period referred to in subsection (1) presented the loan registration request or paid the fee, the Minister may, provided the borrower is not in default in respect of any payment on the loan, extend the period until not more than one year after the date on which the initial disbursement of funds under the loan occurred.

  • (3) Where a loan is advanced by instalments,

    • (a) for the purposes of subsection (1), the loan shall be deemed to have been made on the date on which the initial disbursement of funds under the loan occurred; and

    • (b) the fee payable pursuant to paragraph (1)(a) is one per cent of the full amount of the loan and is payable at the time the lender presents the loan registration request, even in cases where the loan is not yet fully disbursed.

  • (4) and (5) [Repealed, SOR/92-220, s. 11]

  • SOR/85-396, s. 10
  • SOR/87-591, s. 13
  • SOR/92-220, s. 11
  • SOR/95-80, s. 1(E)

Acquisition of Business Improvement Loans Made by Another Lender

[
  • SOR/92-220, s. 13
]
  •  (1) Other than as prescribed by this section, the Minister’s liability to a lender with respect to a business improvement loan made pursuant to the Act ceases if the loan is transferred to, assigned to or acquired by another lender or any other person.

  • (2) Where a lender has made business improvement loans under the Act and the lender subsequently sells all of the business improvement loans outstanding on its books to another lender that is the successor lender, or amalgamates with one or more other lenders to form a newly amalgamated lender, the Minister’s liability under the Act continues in favour of the successor lender or the newly amalgamated lender, as the case may be, on the basis that, as of the effective date of the purchase or amalgamation,

    • (a) the amount of all business improvement loans that were made by the selling lender and the successor lender or by the amalgamating lenders and that were registered by the Minister pursuant to section 25 shall be aggregated and deemed for the purpose of section 5 of the Act to have been made by the successor lender or the newly amalgamated lender, as the case may be; and

    • (b) the amount of all claims for loss previously paid by the Minister to the selling lender and the successor lender or to the amalgamating lenders, as the case may be, shall be aggregated and deemed to be a loss sustained by the successor lender or the newly amalgamated lender, as the case may be, for the purpose of section 5 of the Act.

  • (3) Subject to subsection (4), where a lender has made business improvement loans under the Act and the lender subsequently

    • (a) sells all of the business improvement loans outstanding on its books to a purchaser that is a credit union, caisse populaire or other cooperative credit society or a corporation that, while not as yet designated by the Minister as a lender for the purposes of the Act, is eligible to be designated as a lender pursuant to paragraph (b) or (c) of the definition lender in section 2 of the Act, or

    • (b) amalgamates with one or more credit unions, caisses populaires or other cooperative credit societies or corporations to form an amalgamated corporation that, while not as yet designated by the Minister as a lender for the purposes of the Act, is eligible to be designated as a lender pursuant to paragraph (b) or (c) of the definition lender in section 2 of the Act,

    the Minister’s liability under the Act continues in favour of the purchaser or amalgamated corporation, as the case may be, if as of the effective date of the purchase or amalgamation,

    • (c) the amount of all business improvement loans that were made by the selling lender or the amalgamating lender and that were registered by the Minister pursuant to section 25 are deemed to have been made by the purchaser or the amalgamated corporation, as the case may be, and

    • (d) the amount of all claims for loss previously paid by the Minister to the selling lender or the amalgamating lender, as the case may be, are deemed to be a loss sustained by the purchaser or amalgamated corporation, as the case may be, for the purpose of section 5 of the Act.

  • (4) In the case of a sale or amalgamation referred to in subsection (3), the Minister’s liability continues only if

    • (a) the purchaser or the amalgamated corporation, as the case may be, applies to the Minister, before the acquisition or amalgamation or within one year thereafter, for designation as a lender for the purposes of the Act and for continuity of the Minister’s liability under the Act with respect to those business improvement loans that had been made by the selling or amalgamating lender; and

    • (b) the Minister designates the purchaser or the amalgamated corporation as a lender for the purposes of the Act.

  • SOR/87-591, s. 14
  • SOR/92-220, s. 12
  • SOR/95-80, s. 2(E)

SCHEDULE I(Section 7)Loan Application

GRAPHIC IS NOT DISPLAYED, SEE SOR/87-591, S. 15

  • SOR/78-140, s. 10
  • SOR/85-396, s. 11
  • SOR/87-591, s. 15
  • SOR/92-220, ss. 13, 14(F)

SCHEDULE II(Section 25)Loan Registration Request and Fee Submission

GRAPHIC IS NOT DISPLAYED, SEE SOR/87-591, S. 15

  • SOR/87-591, s. 15
  • SOR/92-220, s. 13

SCHEDULE III(Section 19)Request for Extension of Claim Submission Date

GRAPHIC IS NOT DISPLAYED, SEE SOR/87-591, S. 15

  • SOR/87-591, s. 15
  • SOR/92-220, s. 13

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