Small Business Financing Regulations Amended

Summary#

These are final amendments to the Canada Small Business Financing Regulations (published as SOR/2024-64). They make technical fixes and small policy clarifications for the Canada Small Business Financing Program, and they took effect on April 12, 2024.

What it does#

• Updates definitions so certain industries are defined by the Standard Industrial Classification - Establishments (SIC‑E) 1980, including:
  • Major Group 86 for the health care industry.
  • Major Group 91 for the hospitality industry (removing the previous link to food and beverage services).
  • 479 – Other Storage and Warehousing Industries for the mini‑storage industry.
• Changes wording in the English text from “acknowledgment” to attestation in a borrower statement to match other parts of the rules.
• Clarifies that loans used to buy or improve real property can include the cost of decontamination, and removes the rule that such loans must be secured by a first mortgage.
• Separates the paperwork rules for term loans and lines of credit:
  • Term loans must have a signed document showing amount, interest rate, repayment terms and first payment date.
  • Lines of credit must have a signed document showing the authorized amount, interest rate and repayment terms.
  • Before the end of an additional 5‑year term, a line of credit may be converted into a term loan (maximum 10 years) or paid off with a conventional loan.
• Fixes French/English wording inconsistencies around demand notices and other phrasing.
• Changes the deadline for lender claims for losses to 60 months after the last payment, or, if the borrower never paid, 60 months after the first scheduled payment date.
• Changes a provision so that a 0% interest period can apply to “any period” after a prior period, instead of being limited to a 12‑month period.

Who's affected#

• Small businesses that use the Canada Small Business Financing Program, especially those in the health care, hospitality, and mini‑storage sectors (because of the clarified definitions).
• Lenders that make loans under the Program. They will see clarified paperwork rules, claim deadlines, and options to convert lines of credit.
• Borrowers with lines of credit under the Program may be able to convert those lines to term loans or refinance them before the end of the extra 5‑year term.
• In some places the practical reach is unclear from the text; most changes are administrative or clarifying rather than creating new eligibility.

Why it matters#

• The changes tidy up the rules so lenders and small businesses face clearer definitions and paperwork requirements. That reduces confusion about who qualifies and what documents must be signed.
• Allowing decontamination costs without requiring a first mortgage may make it easier to finance environmental cleanup tied to buying or improving property.
• The clarified claim timeline (60 months) and the new conversion option for lines of credit (up to 10 years) affect lenders’ risk planning and borrowers’ repayment options.
• The government says these are mostly technical fixes and that the changes do not increase costs or impose new burdens on small businesses.