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Commercial loan rate rules

Business borrowing in Canada is carved out of the general criminal rate of interest by thresholds: commercial credit above $10,000 and up to $500,000 is exempt if the APR does not exceed 48 per cent, and above $500,000 there is no rate ceiling.

Commercial credit exempt from the criminal rate: lower threshold more than $10,000 Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19
Commercial credit exempt from the criminal rate: upper threshold $500,000 Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19
Maximum APR on exempt commercial credit 48% Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19
Commercial credit above the upper threshold No rate cap in the Regulations Canada Gazette, Part II — Payday Lending Regulations, SOR/2024-114, as of 2024-06-19
Commercial credit at or below the lower threshold General criminal rate applies (35%) Department of Justice Canada — Criminal Code, as of 2026-07-21

Commercial lending is treated differently from consumer lending under the Criminal Code, and the difference is expressed as thresholds rather than as a single number.

The commercial exemption

Borrowing is exempt from the criminal rate of interest where it is for a business or commercial purpose and the credit advanced is more than $10,000 but not more than $500,000, provided the annual percentage rate does not exceed 48 per cent. That is a wider ceiling than the 35 per cent that applies generally, and it is available only because the borrowing is commercial.

Above the upper threshold

Where more than $500,000 is advanced for a commercial purpose, the Regulations do not impose a rate ceiling at all. That does not mean the borrowing is unregulated: general contract law, securities rules where applicable, and the lender's own regulatory regime may still apply, and the loan agreement itself decides most of what matters.

Below the lower threshold

A commercial loan of $10,000 or less does not get the benefit of the exemption. Borrowing at that size looks like consumer borrowing to the Code, and the general position applies. For a small business, this is the practical line worth knowing: the same lender pricing the same risk is treated differently depending on which side of it the advance falls.

Why the distinction exists

Business borrowers are presumed to be able to assess a rate and to negotiate, and commercial credit markets price risk against expected return in a way that consumer credit does not. The exemption reflects that presumption. It does not protect an owner who has personally guaranteed the borrowing, which is common in small business lending and which puts personal assets behind a commercial rate.

What to compare instead of the ceiling

A ceiling is not a benchmark. For a business, the numbers that decide whether borrowing is worth doing are the total cost of funds against the return the money produces, the effect on cash flow of the repayment schedule, and what happens to the cost if the facility is drawn or repaid early. Personal guarantees and general security agreements deserve reading before signing.

Where to check a business lender

Banks and federally regulated institutions have their own conduct regulator and complaint route. Other commercial lenders are licensed provincially where licensing applies. Our business loans page sets out what a commercial lender reads in a file; the reference section carries the rate thresholds on this page.

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