The Government of Newfoundland and Labrador has filed Regulation 30/25, amending the Credit Union Regulations, 2009 under the authority of the Credit Union Act, 2009. This amendment revises subsection 16(4) to allow credit unions greater flexibility in issuing commercial loans, specifically regarding loans exceeding $25,000. Previously, the regulations permitted credit unions to offer unsecured commercial loans above this threshold, but only under federal relief programs related to the COVID-19 pandemic, and with the approval of the Credit Union Deposit Guarantee Corporation.

During the pandemic, many businesses faced significant financial challenges, including cash flow shortages, reduced revenues, and difficulties accessing traditional forms of financing. To support these businesses, both the Government of Canada and the Government of Newfoundland and Labrador implemented various loan programs aimed at easing the financial burden. These programs, including initiatives such as the Canada Emergency Business Account (CEBA), provided businesses with easier access to unsecured financing, which was critical for sustaining their operations and avoiding permanent closures.

Under the previous version of subsection 16(4), credit unions were allowed to issue unsecured loans exceeding $25,000 as long as they received approval from the Credit Union Deposit Guarantee Corporation. The corporation’s oversight helped mitigate financial risk for the credit unions, while ensuring that businesses in need could access the financial support necessary for their survival.

However, with the end of the immediate crisis caused by the pandemic, it became clear that businesses continued to face financial challenges unrelated to COVID-19, such as trade disruptions, inflation, and other economic uncertainties. Recognizing the need for a more flexible and comprehensive approach, the Government of Newfoundland and Labrador amended subsection 16(4) to allow credit unions to offer unsecured loans over $25,000 under any provincial or federal loan program intended to alleviate financial hardship, regardless of the cause.

Although the regulatory changes expand the scope of eligible loans, credit unions are still required to obtain approval from the Credit Union Deposit Guarantee Corporation before issuing loans under these federal or provincial programs. The Guarantee Corporation is a provincial Crown corporation responsible for ensuring the compliance, stability, and financial integrity of credit unions in Newfoundland and Labrador. The credit union system in the province consists of six credit unions, with 36 branches serving approximately 61,000 members and employing about 320 people.

By expanding access to financing, the provincial government aims to support the long-term stability and growth of local businesses, contributing to the broader economic health of the region.

Newfoundland & Labrador (70/21) March 12, 2025
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