Policy Respecting Designation of Lenders

Part "A"

  1. Section 2 of the Canada Small Business Financing Act (CSBFA) provides that the word "lender" in respect of the Canada Small Business Financing Program means:
    1. a member of the Canadian Payments Association, established by subsection 3(1) of the Canadian Payments Act,
      1. referred to in paragraph 4(1)(b) or (c) or any of paragraphs 4(2)(a) to (c) of that Act, or
      2. referred to in any of paragraphs 4(2)(d) to (h) of that Act if the member meets the prescribed conditions;
    2. a local cooperative credit society, within the meaning of subsection 2(1) of the Canadian Payments Act, that is a member of a central cooperative credit society, within the meaning of that subsection, if that central cooperative credit society is a member of the Canadian Payments Association; or
    3. any other organization designated by the Minister as a lender for the purposes of the CSBFA.
  2. The designation of a lender under the CSBFA means the lender is:
    1. eligible to register loans under the CSBFA; and
    2. eligible to make claims pursuant to the CSBFA and its Regulations.
  3. The following criteria will be considered by the Minister for designation as a lender pursuant to section 14 (1) a) of the CSBFA and section 7 of the Regulations:
    1. is operating in Canada and is currently granting commercial/ business financial services in Canada for the purpose of financing land, premises and equipment and has been doing so for a period of not less than five years;
    2. is incorporated or formed by, or under, an Act of Parliament or the legislature of a Canadian province.
    3. is not already a lender pursuant to subsections (a) or (b) under the definition of "lender" in Section 2 of the CSBFA;
    4. is in good financial standing and is not subject to any proceedings relating to receivership, bankruptcy, insolvency, winding up or dissolution;
    5. does not receive operational funding from Her Majesty in Right of Canada or of a Canadian province and has not done so for a period of not less than five years; and
    6. has Shareholders' Equity in an amount equivalent to not less than eight per cent of Total Assets net of Total Liabilities.
  4. An organization that has not been designated, but meets all the criteria listed in paragraph 3), may be considered for designation as a lender pursuant to subsection c) under definition of "lender" in Section 2 of the CSBFA. The application must reflect the guidelines outlined in Part B of this policy.
  5. Upon the Minister's approval of an organization's application, designation will be in effect. Once designated, the organization's status as a lender could be subject to a review of updated information (as per the original application) at the end of the then current CSBFA five-year lending period.
  6. Pursuant to the authority to designate lenders, the Minister has the inherent right to withdraw designation of any organization designated under Section 2(c) of the CSBFA if the organization:
    1. can no longer meet all of the criteria outlined in paragraph 3);
    2. any of the organization's directors or officers are convicted of fraud; or
    3. the Minister believes, on reasonable grounds, that the continued designation of the organization may be detrimental to achieving the objectives of the CSBFA.

Part "B"

The application should consist of the following:

  1. A resolution from the Board of Directors of the applying organization certifying that:
    1. it is the desire of the corporation to apply for designation as a lender under the CSBFA;
    2. the organization's Articles of Incorporation are true copies;
    3. the Certificate of Good Standing from its jurisdiction of incorporation is valid;
    4. the corporation is in compliance with all statutory requirements and filings;
    5. the authorized business activities as per its Letters of Incorporation include commercial lending or are those of a loan company, a trust company or an insurance company;
    6. the Board is aware of their responsibilities pursuant to the CSBFA and Regulations;
    7. the organization employs commercial lending personnel competent to make and administer business loans of up to $1 million repayable over a term of up to ten years, pursuant to the CSBFA;
    8. the statement signed by a senior financial officer of the applicant, as outlined in paragraph 2, is, to the best of their knowledge, true and accurate; and
    9. the Board understands and accepts that while the administrative responsibility is ongoing while loans made under the CSBFA are still outstanding, the authority to make new loans expires should the Minister exercise the right to withdraw designation under section 5) of Part A of this policy.
  2. A statement signed by a senior financial officer of the applicant:
    1. confirming the date upon which the applicant commenced commercial lending activities;
    2. confirming the number and location of all branches/outlets, if any, of the applicant;
    3. confirming that the applicant possesses commercial lending personnel competent to make and administer business loans of up to $1 million, repayable over up to ten years pursuant to the CSBFA;
    4. certifying the name and title of the person empowered to act on behalf of the applicant; and
    5. providing and certifying: the legal and business names of the applicant (in both official languages, if applicable); the principal address of the applicant and its mailing address, if different; the applicant's appropriate telephone number; facsimile numbers; and electronic address.
  3. A five-year business plan indicating how designation of the applicant as a lender will abet the CSBFA's mandate "to increase the availability of loans for the purpose of the establishment, expansion, modernization and improvement of small business enterprises" in Canada through the provision of financing of the costs associated with the acquisition, improvement, modernization, etc., of land, equipment and premises necessary for the operations of such small business enterprises.
  4. A copy of the most recently audited financial statements of the applicant. Where the financial statements are older than 12 months, interim financial statements not older than 90 days shall also be provided.
  5. If the organization does not fall under the jurisdiction of a Federal or provincial financial regulatory body, such as the Office of the Superintendent of Financial Institutions (OSFI) or provincial equivalents, it may offer security, obtained from a financial institution which qualifies under subsections (a) and (b) under definition of "lender" in Section 2 of the CSBFA, in favour of the Government of Canada, in an amount not less than the forecasted outstanding liability of the Minister. In such cases, the organization would be responsible for maintaining the security as an ongoing obligation as a designated lender under the CSBFA.

Important notice

Providing the information listed above does not guarantee that an applicant will be designated as a lender.

Applications will be considered on a case-by-case basis. It is possible that due to the particular circumstances of an application, the provision of additional information or documentation may be requested.

The application should be forwarded to:

Manager, Program Delivery
Canada Small Business Financing Program
Innovation, Science and Economic Development Canada
235 Queen Street
Ottawa, Ontario
K1A 0H5