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Canada Small Business Financing Program
Policy Respecting Designation of Lenders
Part "A"
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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:
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a member of the Canadian Payments Association, established by
subsection 3(1) of the Canadian Payments Act,
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referred to in paragraph 4(1)(b) or (c) or any of
paragraphs 4(2)(a) to (c) of that Act, or
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referred to in any of paragraphs 4(2)(d) to (h) of
that Act if the member meets the prescribed
conditions;
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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
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any other organization designated by the Minister as a
lender for the purposes of the CSBFA.
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The designation of a lender under the CSBFA means the lender is:
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eligible to register loans under the CSBFA; and
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eligible to make claims pursuant to the CSBFA and its
Regulations.
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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:
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is operating in Canada and is currently granting
commercial/ business financial services, including term
loans and capital leasing, 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;
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is incorporated or formed by, or under, an Act of
Parliament or the legislature of a Canadian province.
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is not already a lender pursuant to subsections (a) or (b)
under the definition of “lender” in Section 2
of the CSBFA;
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is in good financial standing and is not subject to any
proceedings relating to receivership, bankruptcy,
insolvency, winding up or dissolution;
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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
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has Shareholders' Equity in an amount equivalent to
not less than eight per cent of Total Assets net of Total
Liabilities.
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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.
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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.
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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:
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can no longer meet all of the criteria outlined in
paragraph 3);
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any of the organization's directors or officers are
convicted of fraud; or
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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:
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A resolution from the Board of Directors of the applying
organization certifying that:
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it is the desire of the corporation to apply for
designation as a lender under the CSBFA;
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the organization's Articles of Incorporation are
true copies;
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the Certificate of Good Standing from its jurisdiction of
incorporation is valid;
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the corporation is in compliance with all statutory
requirements and filings;
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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;
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the Board is aware of their responsibilities pursuant to
the CSBFA and Regulations;
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the organization employs commercial lending personnel
competent to make and administer business improvement
loans of up to $250,000 repayable over a term of up to ten
years, pursuant to the CSBFA;
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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
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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.
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A statement signed by a senior financial officer of the
applicant:
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confirming the date upon which the applicant commenced
commercial lending activities;
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confirming the number and location of all
branches/outlets, if any, of the applicant;
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confirming that the applicant possesses commercial lending
personnel competent to make and administer business
improvement loans of up to $250,000, repayable over up to
ten years pursuant to the CSBFA;
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certifying the name and title of the person empowered to
act on behalf of the applicant; and
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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.
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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.
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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.
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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
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Providing the information listed above does not guarantee that
an applicant will be designated as a lender.
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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 of Registration, Program Integrity & Revenues
Canada Small Business Financing Program, Industry Canada
235 Queen Street
Ottawa, Ontario
K1A 0H5
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