A business loan might be a useful financial tool for small business owners looking to grow their company, expand their operations, or better manage their cash flow.
In This Article
There are several lenders that offer small business loans, including credit unions, banks, and alternative lenders.
The top business loans in Canada, where to get them, and how to apply are all covered below.
The Best Business Loans in Canada
Some of the best Canadian sources for business loans are included in this section, along with details on how much money your company can get, the terms of the loan, your eligibility, and the benefits and drawbacks of each business loan provider.
1. Loans Canada
One well-liked website for people searching for financing is Loans Canada. This online platform would be a good place to start your search if you want to find multiple lending options in a single application.
You can access a platform of partner lenders offering a variety of solutions on the website by filling out a quick online application. To obtain a free quote, visit the Small Business Loans section of the company’s website and complete the form.
Loans Canada will put you in touch with small business lenders who offer loans between $1,000 and $500,000 and frequently don’t need collateral once you submit the form. Different lenders have different requirements for eligibility and loan applications.
APRs offered by lenders in the Loans Canada network range from 6.99% to 46.96%, although interest rates will vary based on the lender you select and your financial situation. Depending on the lender you select, loan terms can be anywhere from three to sixty months.
Advantages
- Rapid implementation
- Several loan offers from different lenders combined into a single application
- No required minimum credit score
- Adaptable conditions and a repayment schedule
- accepts low credit scores and bad credit
Cons
- There are higher fees and interest rates than in conventional financial institutions.
- Origination fees for loans
- No quotes are available online.
- The majority of lenders in the network are online-only lenders without physical branches.
2. Merchant Growth
A variety of loan options are available from Vancouver-based online lender Merchant Growth. Merchant Growth offers various options for financing: several loan choices, credit lines, and business financing.
You can borrow any amount between $5,000 and $800,000 using term financing. Repayment terms range from six to twenty-four months. Your business must have been established and operating in Canada for at least six months in order to be eligible for this loan. Additionally, you have to make $10,000 a month.
Additional options include credit lines and financing for online purchases. The sums range from $5,000 to $800,000 and from $7,500 to $125,000, respectively.
Fill out the online application or give information to a Merchant Growth representative over the phone to apply for a loan. They will assist you in finding the best loan option. You can get the money within a day of the lender approving your application.
Pros
- Making an application has no impact on your credit score.
- Release of funds within 24 hours
- No collateral, no additional costs
- Various loan options
Cons:
- Minimum monthly sales are required.
- It’s possible that loan costs are higher than those of banks.
- Credit score prerequisites
3. Sharpshooter Funding
Sharpshooter Funding, a Toronto-based alternative lender, offers long-term funding, start-up funding, unsecured business funding, business lines of credit, and other lending solutions to small and startup business owners.
Depending on the loan option you select, your company can benefit from a variety of loan amounts up to $300,000. Loan terms range from six to sixty months, with daily, weekly, biweekly, or monthly payback options.
Visit the Sharpshooter Funding website and complete the online application to apply for a business loan. Provide your contact information and business details, and prepare the necessary paperwork. You must demonstrate that your company has been in operation for at least 100 days in order to be eligible.
Pros
- Faster and simpler loan approvals
- Fast funding (within 36–48 hours)
- Same-day approval
- There is no minimum credit score requirement.
- All industries are accepted.
Cons
- May conduct background checks, credit report inquiries, and other investigative reports.
- Online only
- Higher interest rates for bad credit
4. OnDeck
Over 100,000 clients worldwide have benefited from OnDeck’s international small business loans since 2006. It provides financing choices for loans ranging from $5,000 to $300,000. There are six to eighteen months on loans.
The following criteria must be met in order to be eligible for OnDeck funding: $100,000 in annual revenue, a business bank account, a beacon score of 600, and a minimum of six months of business history with you as the owner.
Fill out the online application or give an OnDeck representative a call to apply for a loan. You’ll hear from a lending advisor who will assist you in selecting the best deal. The funds from your loan application will be in your business bank account within a day of approval.
Pros
- Applying will not impact your personal credit score.
- A+ rating from the Better Business Bureau
- Fund release in as fast as 24 hours
- Competitive pricing
- There is no personal collateral requirement.
- Flexible repayment plans and adjustable interest rates
- Newer businesses may not qualify.
Cons
- Higher cost in return for convenience and flexibility
- Revenue requirements
- Shorter loan terms
- Choosing regular repayments may strain your cash flow.
5. Greenbox Capital
Through its Toronto office, Miami-based Greenbox Capital extends loans to Canadian small business owners. For a minimum of six months, businesses can apply for loans. With terms ranging from three to twelve months, funding amounts vary from $3,000 to $500,000.
The lender will want to see copies of your driver’s license, bank statements, and credit card statements from the preceding months. It’s also possible that a $7,500 monthly income will be necessary.
Visit the Greenbox Capital website to submit an online application and fill it out. To assist you in selecting the best loan, funding advisors will get in touch with you. The lender will process your application and approve it within one business day if you meet all the requirements.
Pros
- Streamlined online application process
- Faster turnaround
- Approvals are based on the potential of your business.
- Same-day approval
- Suitable for businesses with bad credit
- Funds most industries, including high-risk businesses.
Cons
- Daily payments may be required.
- Short loan terms
- High-interest rates
- Startups are not qualified.
6. Canada Small Business Financing Program Loan
Discuss the Canadian Small Business Financing Program (CSBFP) with your bank if you are unable to obtain funding through conventional means. The CSBFP is the best option if you are a Canadian small-business owner or startup with gross annual revenues under $10 million.
The maximum loan amount under the CSBFP is $1.15 million. For a term loan, you can apply for up to $1,000,000, and for a line of credit, up to $150,000. See this page for a list of CSBFP lenders.
Send a business proposal to your credit union, bank, or caisse populaire in order to apply. Following approval, the funds will be disbursed by your financial institution, and the loan will be registered with Innovation, Science, and Economic Development Canada (ISED).
Pros
- Maximum amount of $1.15 million
- Up to 85% of the loan amount is guaranteed by the Canadian government.
- Available in eligible banks, credit unions, and caisses populaires
Cons
- A registration fee of 2% is based on the total amount borrowed.
- Lender fees, such as setup, renewal, and administration fees
- Not all financial institutions offer the program.
What Are the Best Banks for a Small Business Loan in Canada?
These are the top five banks in Canada, each of which provides a broad range of small business loans to suit the needs of different types of business owners.
7. RBC
For entrepreneurs and small businesses, the Royal Bank of Canada (RBC) provides a variety of business financing options and small business loans. The bank also offers government-backed financing options, both short- and long-term, to help small businesses.
Starting at $5,000, RBC offers loans with either fixed or variable interest rates. Loan durations vary from six months to seven years. Interest rates and loan requirements differ from customer to customer.
You need to have a registered business and a business plan in order to apply for a business loan at RBC. There might be more requirements before a loan is approved. The Canada Small Business Financing Program is another service provided by RBC.
Pros
- Multiple financing options that offer flexibility
- Longer loan terms
- Flexible repayment options
- Funding through direct deposit
- No prepayment fees
Cons
- More stringent eligibility criteria than alternative lenders
- No online loan application
- Interest rates are not immediately available.
- Bad credit is not accepted.
8. Scotiabank
Small business owners can take advantage of the specialized products and services that the Bank of Nova Scotia provides, which range from government programs meant to support startups and established businesses to short- and long-term lending solutions.
Entrepreneurs are able to obtain loans of up to $1,000,000 with terms as long as ten years and competitive fixed or variable interest rates. Business credit cards, business bank accounts, business lines of credit, and small business loan protection are among the additional services provided.
Make an appointment with a small business advisor in order to apply for a business loan. Scotiabank will reply to your loan application, bank statements, and other supporting documents within a week of receipt.
Pros
- Long loan terms
- Flexible repayment options
- Funding through direct deposit
- High loan amounts
Cons
- Strict eligibility requirements
- Bad credit is not qualified.
- Only businesses with annual sales of up to $15,000,000 can apply using the bank’s online application.
9. TD
Toronto-Dominion Bank provides credit lines and small business loans to meet your short-, medium-, and long-term requirements. TD can help you get in touch with the appropriate Canadian government funding if you require it.
Financing for small businesses can reach $1,000,000, contingent on the type of loan you seek. Interest rates may be variable or fixed. The length of a loan amortization period is 20 years. There are also business loan options available for funding assets and expenses.
Speak with a small business specialist about your plans to apply for a business loan; they will advise you of the necessary documentation depending on the size of the loan you plan to take out.
Pros
- Competitive rates
- Flexible repayment options
- Fixed monthly payments
- Interest-only payment option
- Long amortization periods
- A preferred SBA (Small Business Administration) lender
Cons
- A good personal and business credit score may be necessary to qualify for a business loan.
- Financing can only be used for assets.
- Collateral may be required.
- Interest rates are not available on the website.
10. BMO
For small business owners in need of funding to launch or expand their enterprises or to meet urgent financial requirements, Bank of Montreal offers a variety of business loans and credit lines.
BMO offers loans with a variety of terms and repayment schedules. You are able to obtain a loan of between $250,000 and $1,000,000. Loan terms can last up to 15 years, and interest rates can be either fixed or variable.
Make an appointment with a BMO bank representative at one of its branches to apply for a small business loan. Get your financial records, necessary paperwork, and business plan ready. Following the submission of your application, BMO might get in touch with you in a few days or weeks.
Pros
- Large loan amounts
- Various financing alternatives
- Flexible repayment options
- Long loan terms
- Competitive interest rates
- Applicable to borrowers with a good credit score
Cons
- Long approval process
- Collateral may be required.
- Online applications are not available.
- Loan requirements are more stringent.
- Interest rates are not available on the bank’s website.
11. CIBC
From start-ups to seasoned businesspeople, the Canadian Imperial Bank of Commerce offers a range of loans for various business needs. It offers funding to support the expansion of your company at any point.
CIBC provides business overdraft protection, credit lines, secured and unsecured business loans, and CSBFP loans. The range of loan amounts is $10,000 to $1,000,000. Amortization periods can last up to 15 years, and interest rates can be either fixed or variable.
Your company must have positive revenue for at least 12 to 24 months in order to be eligible for a loan. A thorough business plan and a high credit score are also essential. For loan applications, speak with a CIBC Business Advisor. You could receive the money in as little as two days if your application satisfies CIBC’s requirements.
Pros
- Flexible loan options
- Large loan amounts
- Long amortization periods
- Competitive interest rates
Cons
- Additional charges (setup, renewal, prepayment, amendment fees)
- Bad credit is not accepted.
- Online applications are not available.
- There is no option for lower loan amounts.
How to Apply for a Business Loan in Canada
The process of applying for a business loan varies from lender to lender, but here is a general guide to applying for a business loan.
- Choose a lender. You can get a business loan from traditional lenders, like your bank, or alternative lenders. Each has its own capacity. Do research and obtain quotes if possible.
- Submit your loan application. Depending on the type of lender you choose, you can apply online via their website or in person at a branch.
- Provide the requested documentation. Supply the documents your lender requires, such as valid identification, business bank statements, financial statements, and other documentation the lender needs to approve your loan.
- Select repayment terms. Repayment periods can be daily, weekly, biweekly, or monthly. Your lender may give you the option to choose a repayment period. Choose what works best for your business.
- Receive the funds. When your lender approves your bank loan, it will send the funds via wire transfer, electronic fund transfer, or direct deposit. If you get a loan from an alternative lender, the funds will be available in a few hours or minutes.
Pros and Cons of Business Loans
Pros of Business Loans
- There are many lending solutions and options.
- Longer loan terms
- Flexible repayment schedules
- Banks often require a good credit score.
- Business loans from banks offer competitive rates.
- Alternative lenders provide quick application, approval, and funding.
Cons of Business Loans
- Startups are not always qualified.
- Traditional lenders have lengthy approval periods.
- Must be able to demonstrate good financial health.
- Banks have strict eligibility guidelines.
How to Choose the Right Business Loan for You
In choosing a business loan, several points help you select the loan option for your business needs.
- Compare interest rates. Examine several loan offers prior to selecting a provider. You can potentially save thousands of dollars over the course of your loan by comparing interest rates and fees and securing the best offer.
- Check the loan terms. Although longer terms are more economical, the cost of borrowing increases. You will pay more interest the longer the loan term. Determining whether the loan is a good fit for you is made easier when you are aware of the terms.
- Choose a suitable repayment schedule. Different repayment terms are available from lenders, including daily, weekly, biweekly, and monthly. While some lenders let you choose your term, others demand payments on a daily basis.
- Inquire about the fees. There may be extra costs associated with loans with lower interest rates. Inquire about origination, late payment, early repayment, application, and administrative fees, among other loan expenses.
- Review the loan terms and conditions. Examine the loan’s conditions, including its terms, flexibility in repayment, penalties, and fees. Making an informed decision is aided by being aware of the loan terms and conditions.
Should You Get a Business Loan?
Obtaining a business loan can be done for a number of reasons. However, it is prudent to exercise caution when making significant business decisions, especially if they require taking on a sizable debt load. The best times for your company to think about getting a loan are listed below.
- Business is booming. Is your company prepared to move to a new location? If so, financing your expansion may require a business loan. Dealing with up-front expenses and adjustments to overhead may be necessary when making the choice. You can get ready for the big move by applying for a business loan.
- You need to keep up with the demand. Obtaining a business loan might make sense if your enterprise is seasonal. Adding to your inventory is one of your company’s largest costs. If you don’t have the money to buy a lot of inventory, that could be difficult.
- You need new equipment. Are you thinking about investing in new machinery to enhance your company’s operations? You can finance the purchase of new machinery by taking out a loan, which can also be used as collateral.
One must ensure they possess the necessary capacity and resources to repay a business loan in a timely manner, without any missed payments, prior to making the decision to acquire one.
FAQs
What is a reasonable interest rate for a business loan?
A fair rate typically depends on the kind of loan that best meets your company’s needs and the interest rates that your company qualifies for. If you use a traditional lender and have good to excellent credit, you can get a good business loan interest rate in Canada, which is between the prime rate and 17%. However, if you select a different lender and have poor credit, interest rates may reach 46% or more.
What documents are required for business loans?
Lenders typically require the following documents when applying for a business loan: collateral, company details, your personal financial information, your credit score, bank statements, business and personal tax returns, and a business plan.
How long does it take to get a business loan?
It can take anywhere from a few weeks to a day, depending on where you apply for a business loan. You can obtain a loan in one business day if you borrow from an alternative lender. It could take a few days to a few weeks for traditional lenders to approve your loan.
Which bank gives lower interest on business loans?
While some alternative lenders offer business loans with annual percentage rates (APRs) as low as 6%, traditional banks can offer small business loans with interest rates as low as 6%. Use loan comparison websites such as Loans Canada, shop around for the best rates on these loans, or get online quotes from different lenders.
Is 17% a high interest rate for a loan?
An average loan has an interest rate of 17%. Generally, borrowers with a fair credit score are eligible for this rate.
Why do banks reject small business loans?
Banks typically reject business loans for two main reasons: undercapitalization and excessive debt. Banks may reject a small business loan for a variety of reasons, including insufficient collateral, cash flow constraints, inadequate time in business, subpar business performance, and failure to meet lender requirements.