Few things unsettle a bank faster than a Canada Revenue Agency arrears balance. Unremitted payroll source deductions and GST are held in a deemed trust for the Crown that can rank ahead of a lender’s security, and directors can be held personally liable for them. On top of that, CRA collections can redirect receivables through a requirement to pay or register against property with little notice. Banks, reasonably, do not want to be behind the Crown.
Why it happens to good businesses
A slow-paying customer, a bad quarter, a fast-growth year when cash went into inventory. Source deductions and GST are easy to fall behind on in a crisis and hard to catch up on later, because interest and penalties compound and CRA’s patience is limited.
How a secured bridge resolves it
- The lender advances against real estate, equipment or receivables to pay the arrears in full or fund a negotiated payment arrangement.
- CRA’s priority claim is cleared, which removes the obstacle to bank financing.
- The business returns to current filings while the bridge is repaid from cash flow or a bank refinance over six to twenty-four months.
What we need to see
The CRA statement of account, confirmation that current filings are up to date or a plan to get them there, and collateral that supports the loan on its own merits. We do not lend to pay arrears where the underlying business cannot carry the debt; that only moves the problem. Where it can, clearing CRA is often the single highest-return use of private capital we see.
Have a situation like this? Tell us about the deal and a principal will respond within two business days. Cascade lends to businesses only, in Canadian dollars, and every rate we quote is an annual rate.
