Regulations Amending the Canada Small Business Financing Regulations (Miscellaneous Program): SOR/2024-64
Canada Gazette, Part II, Volume 158, Number 9
Registration
SOR/2024-64 April 12, 2024
CANADA SMALL BUSINESS FINANCING ACT
P.C. 2024-317 April 12, 2024
Whereas, under subsection 14(3) of the Canada Small Business Financing Act footnote a, the Minister of Small Business and Tourism caused a copy of the proposed Regulations Amending the Canada Small Business Financing Regulations (Miscellaneous Program), substantially in the annexed form, to be laid before the House of Commons and the Senate on February 27, 2024;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Small Business and Tourism, makes the annexed Regulations Amending the Canada Small Business Financing Regulations (Miscellaneous Program) under subsection 14(1) of the Canada Small Business Financing Act footnote a.
Regulations Amending the Canada Small Business Financing Regulations (Miscellaneous Program)
Amendments
1 The definitions health care industry, hospitality industry and mini-storage industry in subsection 1(1) of the Canada Small Business Financing Regulations footnote 1 are replaced by the following:
- health care industry
- refers to a small business classified under the heading Major Group 86 – Health and Social Service Industries of the Standard Industrial Classification - Establishments (SIC-E) 1980 published by Statistics Canada. (industrie des soins médicaux)
- hospitality industry
- refers to a small business classified under the heading Major Group 91 – Accommodation Service Industries of the Standard Industrial Classification - Establishments (SIC-E) 1980 published by Statistics Canada. (industrie hôtelière)
- mini-storage industry
- refers to a small business classified under the heading 479 – Other Storage and Warehousing Industries of the Standard Industrial Classification - Establishments (SIC-E) 1980 published by Statistics Canada. (industrie du mini-entreposage)
2 The portion of paragraph 3(1)(i.1) of the English version of the Regulations before subparagraph (i) is replaced by the following:
- (i.1) in the case of a loan referred to in paragraph 5(1)(e), the borrower’s attestation that
3 (1) The portion of subsection 5(3) of the Regulations before paragraph (a) is replaced by the following:
(3) A loan referred to in paragraph (1)(a) for the purchase or improvement of real property or immovables may include the cost of decontamination of real property or immovables if
(2) Paragraph 5(3)(b) of the Regulations is repealed.
4 (1) Subsection 10(1) of the Regulations is replaced by the following:
10 (1) On or before the day on which a loan referred to in any of paragraphs 5(1)(a) to (d) is made, the lender and the borrower must sign a document that sets out the principal amount of the loan, the rate of interest payable, 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.
(1.1) On or before the day on which a loan referred to in paragraph 5(1)(e) is opened, the lender and the borrower must sign a document that sets out the authorized amount of the line of credit, the rate of interest payable, the repayment terms and, if applicable, the frequency of payments and the day on which the first payment is due.
(2) Section 10 of the Regulations is amended by adding the following after subsection (6):
(6.1) Before the end of the additional five year term referred to in paragraph (6)(a), the lender and the borrower may
- (a) 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
- (b) enter into an agreement to repay the balance of the line of credit with a conventional loan.
5 Subsection 37(2) of the French version of the Regulations is replaced by the following:
(2) Si l’emprunteur est en défaut aux termes de l’article 36, le prêteur fait une demande de remboursement du solde impayé du prêt dans le délai qui y est précisé avant de présenter sa réclamation pour perte aux termes de l’article 38.
6 (1) Subsection 38(2) of the Regulations is replaced by the following:
(2) Regardless of the nature of the default, a lender must submit a claim for loss within 60 months after the day on which the last payment on the loan is received or, if the borrower has made no payment on the loan, 60 months after the day on which the first payment is scheduled.
(2) Paragraph 38(8)(d) of the Regulations is replaced by the following:
- (d) in respect of any period following the period referred to in paragraph (c), at a rate of interest of 0%.
Coming into Force
7 These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Canada Small Business Financing Regulations (CSBFR) require a number of minor technical and clarificatory amendments in order to repeal unnecessary provisions, correct discrepancies between the English and French versions and clarify language to reflect current operational and administrative practices.
Objective
The regulatory amendments have the following objectives:
- to repeal obsolete or spent regulatory provisions that have no current application;
- to eliminate an unnecessary duplication of text;
- to renumber sections and/or to correct references to section numbering;
- to correct a discrepancy between the French and English versions; and
- to make non-substantive amendments to improve clarity.
Description and rationale
The CSBFR has been amended to make several changes to clean up outdated regulations, correct language and fix inconsistencies between the English and French versions. These changes include
Subsection 1(1): Update the definitions of “health care industry,” “hospitality industry,” and “mini-storage industry” to replace outdated Standard Industrial Classification from “Standard Industrial Classification, 1980” to “Standard Industrial Classification - Establishments (SIC – E) 1980” to conform with the changes made by Statistics Canada.
Subsection 1(1): Update the definition of “hospitality industry” by deleting the reference to “and Major Group 92 - Food and Beverage Service Industries,” as the hospitality industry should only refer to major group 91 (accommodation service industries) of the Standard Industrial Classification - Establishments (SIC – E) 1980.
Paragraph 3(1)(i.1): In the English version of the document, replace the term “acknowledgment” with the term “attestation” to conform with the language in subparagraphs 38(4)(a.1)(i) and 38.1(3)(a.1)(i).
Subsection 5(3): In the chapeau, additional clarification is needed to demonstrate that loans to finance both the purchase and improvement of real property or immovables are allowed under the Regulations, and may cover the cost of decontamination of real property or immovables. Propose that the clause “or improvement” be added after the word “purchase.”
Paragraph 5(3)(b): Delete this paragraph to remove the requirement that the loan is secured by a first mortgage on the real property or immovables.
Subsection 10(1): Amend to apply only to loans described in paragraphs 5(1)(a) to (d), as the conditions set out are for a term loan and do not readily apply to a line of credit.
Establish a new subsection 10(1.1) to set out the conditions for the line of credit document which would be signed by the lender and borrower. The conditions being: On or before the day on which a loan referred in paragraph 5(1)(e) is opened, the lender and borrower must sign a document that sets out the authorized amount of the line of credit, the rate of interest payable in respect of the line of credit, the repayment terms and, if applicable, the frequency of payments and the day on which the first payment is due.
Add a new subsection 10(6.1) to allow, before the end of the 5-year term in paragraph 10(6)(a), the line of credit to be converted to a 10-year term loan under subsections 10(1) and (3) to (5) or repay the line of credit with a conventional loan.
Subsection 37(2): Delete the text “par voie de mise en demeure” in the French translation because there is an inconsistency between the English and the French wording. The French version stipulates a demand by way of formal notice, which is not the policy intent.
Subsection 38(2): Amend this subsection to take into consideration the start date for the calculation of the 60-month claim submission period. In situations where the borrower makes no payment on a term loan or line of credit, the start date is the day after the day on which the first payment is scheduled.
Paragraph 38(8)(d): Replace the words “the 12-month period” with the text “any period,” as the reference to the payment of 0% should refer to any period following the period mentioned in paragraph (c) and not only to the 12 months following paragraph (c).
One-for-one rule and small business lens
The one-for-one rule does not apply, as there will be no change to the administrative costs or the administrative burden of the Regulations.
Analysis under the small business lens determined that the proposal will not impact small businesses in Canada.
Contact
Innovation, Science and Economic Development Canada
Canada Small Business Financing Program
235 Queen Street
Ottawa, Ontario
K1A 0H5
Email: csbfr-rfpec@ised-isde.gc.ca