Bulletin – January 2006

In our July 2005 Bulletin (PDF Version, 123.18 KB — 2 pages), we informed you that the Guidelines for the Canada Small Business Financing Program had been revised and we highlighted the major revisions.

Since then, we have received some helpful suggestions and comments on the revised Guidelines. As a result, changes to clarify the text have now been incorporated into the Guidelines as explained below:

• In Item 4.3, Section A, we have included the definition of "improvement" as it relates to the financing of equipment.
• In Example 1 at Item 5.1, Section A, the June 5th date is incorrect and the correction has been made to read July 5th.
• At the end of Item 5.1, Section A, we have added a NOTE specifying that the cost of the financed asset must be reduced by any grants, discounts, refunds and reimbursements.
• In Item 5.1.1, Section A, in the case of the 3-year rule, we have indicated that the exceptions to the 3-year rule (mini-storage, health care and hospitality), apply only in the case of leases and sub-leases.
• At Item 6.2, Section A, the condition concerning the setting of the interest rate on the date the loan document is signed applies so long as the security document refers to the loan document.
• At Item 7.2, Section A, the security must be valid and enforceable as of the date of the first disbursement of the loan.
• At Item 7.2.1, Section A, in the case of the 30-day equal ranking, the equal ranking applies only to those assets taken to secure the conventional loan that would be CSBF-eligible. Further, where the borrower's personal assets secure the conventional loan, the equal ranking would only apply to those personal assets that are commercial in nature and that would be CSBF-eligible.
• At Item 6.2, Section B, we have clarified the 2 conditions that must be fulfilled for the release of guarantors and guarantees. We have also elaborated situations in which those conditions may not be fulfilled and the guarantors are released.
• The notice of default referred to in Items 3 and 5.2, Section C is the notice of default as defined in Items 1.1 and 1.2, Section C. These definitions cover those instances where a notice of default has not been sent by the lender (e.g., assignment into bankruptcy).
• In Item 3, Section C, we have elaborated on the pro-rating of personal guarantees or personal obligations of the sole proprietors or partners.

These changes have been made to the HTML and PDF versions of the Guidelines on our website.

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