Yes — 35% a year on the credit actually advanced, and it is a criminal offence to exceed it, not just an unenforceable term.
Short answer
Section 347 of the Criminal Code makes it an offence for “every person who enters or offers to enter into an agreement or arrangement to receive interest at a criminal rate…or who receives a payment or partial payment of interest at a criminal rate” — a rule that applies to any commercial lending, acquisition bridges included. A “criminal rate” is defined as “an annual percentage rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds 35 per cent on the credit advanced.”
Two definitions in s.347(2) do the damage on a short bridge loan. “Interest” is “the aggregate of all charges and expenses, whether in the form of a fee, fine, penalty, commission or other similar charge or expense or in any other form, paid or payable for the advancing of credit”, so an arrangement fee, a standby fee and an exit bonus all count as interest, not just the coupon. “Credit advanced” is then reduced by those same fees, shrinking the denominator the rate is measured against. A fee therefore moves the ratio twice — up in the numerator, down in the denominator — and a fee package that looks unremarkable on a multi-year term can breach 35% once it is annualised over ninety days. The carve-outs are narrow: s.347(8) for the Tax Rebate Discounting Act, and s.347.1 for licensed payday lending under $1,500 — neither reaches a commercial acquisition bridge.
fees that pushed the bridge past thirty-five per cent works the full arithmetic on a 90-day bridge where a headline 14% coupon plus front-loaded fees annualised to roughly 47.5%. A different rate trap on a longer-term vendor note — a monthly rate stated with no annual equivalent — is covered at a note priced at one and a half per cent a month.
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