Business & Commercial Lending in Nunavut

The Canada Small Business Financing Program, established under the Canada Small Business Financing Act, shares the risk of term loans between the federal government and participating lenders. By providing a partial government guarantee, the program is designed to expand access to credit for small businesses that might otherwise struggle to secure financing, a dynamic that is especially relevant where collateral and market depth are limited.

The Business Development Bank of Canada (BDC) provides financing and advisory services to Canadian enterprises, including those in the territories. Community-based lending organizations and the federal regional development agency for the North, the Canadian Northern Economic Development Agency (CanNor), support enterprise development where conventional bank credit is thin.

These institutions operate alongside chartered banks rather than replacing them, and they are frequently the practical source of patient capital for seasonal and resource-linked Nunavut businesses.

Regional Inuit development corporations invest in and finance local enterprises, channeling capital derived in part from the Nunavut Agreement into the territorial economy. This creates an ownership and financing model that is distinct from southern commercial lending, aligning economic development with the beneficiaries of the land-claims agreement.

Under the Income Tax Act, interest on money borrowed to earn income from a business or property is generally deductible, subject to statutory conditions. This deductibility is administered by the Canada Revenue Agency and is a core reason business credit is analyzed differently from consumer credit: the after-tax cost of borrowing can differ materially from the nominal rate.