How to document a Canadian business loan repayment default under a written agreement

Start by answering one simple question: does the written loan agreement describe a default? In almost every commercial dispute the agreement itself both defines what counts as a default (missed payments, breach of a covenant, disposal of collateral) and controls what, if any, notice or cure periods must be provided. If you want to preserve your collection options, document the default factually and contemporaneously: cite the contract provision, record exact dates and amounts, send any required Notice of Default, follow program templates for federally backed loans, and preserve registration evidence for any security interest.

Below I explain the practical sequence, what records actually matter in court or a claims process, and key provincial variations you must watch for—particularly around Personal Property Security Acts (PPSA) and small-claims/civil tracks.

Identify and record the contract definition of "default"

The first documentary step is to read the written agreement and mark the exact default triggers and remedy process it prescribes. A loan agreement typically defines default (missed principal/interest; failure to insure; unauthorized sale of collateral) and may require a written Notice of Default and a fixed cure period. Federal program rules use the same framing: the Canada Small Business Financing Program (CSBFP) treats default as failure to comply with a material condition of the loan agreement and gives concrete examples you can cite when describing the breach. See the CSBFP guidance for those examples and templates. (Canada Small Business Financing Program guidelines)

Why this matters: if your paperwork doesn’t reference the same contract language a court or claims mediator will look to, you weaken the simple story that the borrower failed to meet an agreed obligation.

Prepare and send a clear Notice of Default, then a Demand for Repayment if required

If the contract (or any applicable program rules) requires a notice and cure period, send a written Notice of Default that includes all of the following:

• the exact contract clause breached;
• facts: missed payment dates, instalment amounts, and outstanding balance as of a specific date;
• the remedial action required (e.g., "pay $X by date Y" or "cure insurance lapse");
• a clear deadline and how you will deliver the notice.

For loans under the CSBFP the program materials explicitly contemplate a Notice of Default and permit combining it with a Demand for Repayment when appropriate; those templates are useful if your loan is program-backed. (CSBFP: Notice of Default and Demand for Repayment guidance)

If the borrower fails to cure by the deadline, issue a formal Demand for Repayment that calculates the total owing, cites the contractual basis, states a final payment date, and explains the consequences of non-payment (registration enforcement, court action, or enforcement of security). Keep copies of every letter and proof of delivery (registered mail receipts, courier tracking, or an acknowledged email). Courts note that a clear contemporaneous demand helps convert a commercial dispute into a straightforward liquidated claim. (Small Claims guidance — making a claim)

Preserve contemporaneous evidence—what to keep and why

When documenting a default, contemporaneous records are what courts and enforcement officers want. Keep:

• the original loan agreement and any amendments;
• payment records showing missed payments (bank statements, electronic transfer logs);
• copies of Notice(s) of Default and Demand for Repayment and proof of delivery;
• correspondence and any admission or response from the borrower;
• internal notes of phone calls (who, when, what was said);
• registration documents for security (see next section) and any title or collateral photos.

Why: a written loan with a fixed amount is a "liquidated" claim; the court relies on documentary proof to accept your calculation of the amount owing. See the small claims and civil-claims guides for how documentary evidence figures into a claim and enforcement. (Civil claims: suing and being sued)

Check or register security under the provincial PPSA (PPSR)

If the loan was secured by personal property, check the relevant provincial Personal Property Security Register (PPSR). In Ontario, for example, registration of a financing statement "perfects" the security interest and preserves priority; failing to register can leave a secured creditor behind other registrants. Use the provincial registration portal to file or to search existing financing statements. (Register a security interest — Ontario Access Now)

Important caveat: PPSA regimes are provincial. The place to register (and the forms) depends on where the debtor’s collateral is located and on the province’s rules. The Ontario statute and guidance explain how registration affects priority and enforcement. (Personal Property Security Act, R.S.O. 1990, c. P.10)

If you intend to sue: choose the right court and understand enforcement limits

For a straightforward loan with a set unpaid balance, provincial Small Claims Court is often the appropriate forum (limits vary by province). If the borrower does not defend, local rules permit seeking a default judgment; but a judgment is not the same as collection—enforcement (garnishment, seizure of assets) is a separate process and depends on available assets. Consult the provincial small‑claims enforcement guide to plan those steps. (Small Claims: after judgment — enforcement)

Practical point: check limitation periods in the province where you would sue; courts will dismiss stale claims. The provincial civil-claims pages discuss limitations as part of pre-suit checking. (Civil claims: suing and being sued)

When to seek legal advice and realistic expectations

Get a lawyer if: the borrower disputes the debt or claims offsets; the priority of a security interest is unclear or unregistered; the borrower may be insolvent; multi‑jurisdictional filings are needed; or the amounts are large. Legal advice is also prudent when enforcement will involve complex remedies. Remember: even a perfectly documented debt may be uncollectible if the borrower lacks attachable assets.

A measured next step for many lenders is a professionally drafted demand letter that follows contract language and program rules. If you prefer that route, consider using a specialist service that prepares dispute documents from your information—note that such services do not provide legal representation. For an option that prepares professional demand letters, see .

Documenting a default correctly does not guarantee collection, but it creates the clear factual and administrative record courts and enforcement officers require. With the right notices, contemporaneous evidence, and attention to PPSA registration, you preserve your legal options and avoid procedural mistakes that can be costly to fix.

For help preparing a professional demand letter, BeforeSuit can help you prepare your next steps.