Small Business Financing Changes Come Into Force

Summary#

This Order in Council fixes July 4, 2022 as the day certain parts of Division 17 of Part 4 of the Budget Implementation Act, 2021, No. 1 come into force. Those provisions amend the Canada Small Business Financing Act so the law lines up with changes in the Regulations that expand small-business lending options. The Order does not bring into force subsections 204(2) and (3) and 206(1).

What it does#

• Brings into force specific provisions (subsection 204(1), section 205, subsection 206(2), and section 207) of the Budget Implementation Act, 2021, No. 1 that amend the Canada Small Business Financing Act.
• Aligns the law’s timing with the Regulations Amending the Canada Small Business Financing Regulations so legislative and regulatory changes take effect the same day.
• Together with the related Regulations, the changes will:
  • allow a $150,000 line-of-credit product for small businesses;
  • let lenders finance more types of assets, including intangible assets and working capital;
  • raise the maximum loan from $350,000 to $500,000;
  • extend loan coverage for equipment and leasehold improvements from 10 to 15 years;
  • expand borrower eligibility to include not-for-profit and charitable social enterprises (an amendment expanding borrower eligibility had already been brought into force earlier).

Who's affected#

• Small businesses that need loans or lines of credit.
• Not-for-profit and charitable social enterprises that may now qualify for program support.
• Banks, credit unions and other lenders that take part in the Canada Small Business Financing Program. They will need to update systems and procedures to offer the new products.
• Innovation, Science and Economic Development Canada, which led consultations on these changes.
• If it’s unclear who is affected by any excluded subsections (204(2) and (3), 206(1)), the Order does not explain why those parts were left out.

Why it matters#

• The change makes it easier for small businesses to get modern and flexible financing — for example a line of credit, funding for intangible assets, and larger loans.
• Officials expect these changes to support more lending — about $560 million in new annual lending is the estimate mentioned in the source.
• Getting the law and regulations to come into force the same day avoids delays so lenders can start offering the new options sooner.
• For small businesses recovering from the COVID-19 pandemic or moving into digital business models, these updates could improve access to capital.