The new year will bring with it changes to the regulation of
interest rates in Canada. Effective January 1, 2025, one such key
change will be to the Criminal Code criminal interest
rate. A new, lower, criminal rate of interest limit will now be set
for loans, subject to various exemptions/carve outs. In our view,
the most important change is that business/commercial purpose loans
to corporate borrowers in excess of $500,000 will not be subject to
any interest rate cap.
Only new loan arrangements made on or after January 1, 2025 will
be impacted by this change – existing loans will continue to
be subject to the current 60% Effective Annual Rate (EAR) cap on
interest.
What is the Criminal Interest Rate?
