Note:
This document does not represent the comprehensive details of the requirements of the Canada Small Business Financing Act and Regulations. Please consult the complete text of the Guidelines on the Canada Small Business Financing Program website.
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Loan Approval – Key Requirements Checklist
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Requirement | Description | Guidelines |
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Due Diligence |
Lenders must apply the same due diligence requirements as for a conventional loan for the same amount, conduct a credit checks on the borrower and/or shareholder(s), guarantor(s) and complete an assessment of the repayment ability of the borrower. |
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Eligible Borrower |
Is the borrower (corporation, sole proprietor, partnership) carrying on or about to carry on a small business? |
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Eligible Small Business |
Small business must be:
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Ineligible Borrowers: |
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Maximum Amount |
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Loan Assets |
Assets eligible for financing: |
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Item 4.1.1 |
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Common ineligible assets examples:
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Eligible assets purchased 365 days before loan approval date can be financed whereas eligible assets purchased more than 365 days before loan approval cannot be financed. A line of credit may be made to finance working capital costs necessary to cover day-to-day operating expenses of a business. |
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Proof of Purchase and Payment for term loans only |
Proof of purchase and payment (invoices, cancelled cheques etc.) by the borrower have been obtained for loan assets. The invoice must contain a description of the asset. For a line of credit, did the borrower signed the attestation? |
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Appraisals Required |
Appraisals have been obtained if:
Eligible amount of financing is the lesser of cost of purchasing and appraised value |
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Terms of the Loan |
Do the repayment terms, interest rate, charges and fees comply? :
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Security |
Has security been taken in the financed assets?
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Loan Registration |
The loan must be registered within 6 months from date of the first disbursement of loan funds. |