Business Loans

Business Loans in Canada

Small business loans can be a great way to borrow money when you need to purchase equipment, fund a marketing campaign, or open a new location. At Smarter Loans, our panel of 50+ industry experts have reviewed and qualified Canada’s most trusted lenders. We make it easy to find the small business loan or financing program that you need quickly, with the best rates and flexible repayment terms.

What is a Good Interest Rate?

Current rates for businesses range from about 7.99% to 10%. A good interest rate, however, is one you can comfortably afford to pay when making your monthly repayments. If you’ve been operating for at least 6-12 months—and have a minimum of $10,000 in monthly sales—Smarter Loans can connect you with the the financial institutions and resources you need. Pre-apply online (right corner), or check out our roster of reputable Canadian lenders below to find the best rate for you.

Let Smarter Loans connect you with the top business loan providers in Canada.

Get Business Loan Now!

Top Business Loans Providers in Canada

Company
Amount
Interest Rate
Reviews
Terms
$5,000 - $300,000
Starting at 7.99%
4 - 18 Months
$5,000 - $500,000
Varies
4 - 12 months
$5,000 - $300,000
Starting at 7.99%
3 - 12 months
$5,000 - $500k
Varies
6 -12 months
$5,000 - $250,000
Varies
N/A
$500 to $300,000
Starting at 8.39%
2, 3, 4, 6, 9, 12, 18 or 24 month terms
$5000 - $800,000
Starting at 7.99%
6 - 24 Months
$10,000 - $250,000
Varies
3 - 12 months
$250 - $1,000,000
Starting at 10%
3 months - 60 months

Why Get a Loan for Your Small Business?


Financial support is a key to success for small businesses. That’s why business credit has grown in popularity in recent years.

Value of business credit disbursed in Canada from first half 2018 to first half 2022, by type of supplier (in billion Canadian dollars)

Source: Statista.com

With a small business loan, you can borrow a fixed amount of money, invest it in your company’s growth, and pay it back by instalments over a period of time. By saving your cash to run your business–instead of spending it on large expenses or lump sum payments–financing solutions can help you to grow your business faster.

What You Can Use Business Financing For


Get established

Get the working capital new small businesses often need to buy inventory, keep employees, execute marketing plans, or finance a small business purchase. New small businesses and business financing program often require a steady influx of working capital to purchase inventory, retain valuable employees, execute strategic marketing plans, and finance essential purchases. Securing this funding can be a critical step in bringing your entrepreneurial vision to life. Some lenders may request a personal guarantee, while others may offer government-backed programs to assist you in obtaining the necessary capital to ensure your small business thrives from its inception to the present date

Grow your company

Grow your small business by borrowing money to hire staff, develop new products, or upgrade machinery, or tools. Your small business growth can benefit from funding needed to hire additional staff, drive innovation with the development of new products, or enhance your company’ operational efficiency. Whether you’re a new business seeking to expand or an established one looking to borrow more to pay for growth initiatives, accessing the right pay can be a pivotal step to effectively grow your business.

Manage cash flow

A small business financing program Improve cash flow management by accessing small business financing, which can provide your business with the necessary capital to finance small projects and cover emergency or short-term expenses, such as rent and payroll during seasonal downtimes. This type of government-backed loan is designed to assist companies like yours in maintaining stability and ensuring uninterrupted operations. Whether you’re a new company looking to scale or an established business in need of machinery payments, this source of capital can play a crucial role in sustaining and growing your business.

Expand your operation

When you’re considering renovating your premises, funding an acquisition, or purchasing commercial property, Smarter Loans offers valuable assistance by connecting you with loans of up to $1,000,000+. Our platform simplifies the application process, helping small businesses calculate their borrowing capacity and assess rates on new business loans, ensuring that you can make informed financial decisions.

Unlock your full potential as a business owner by delegating essential tasks to trusted business service professionals. Elevate your success as you regain the time and energy needed to focus on growing your business with Top Solutions and Vendors for Businesses in Canada.

Find the Financing You Need with Smarter Loans


Here are just some of the financial solutions we can help you access when you connect with one of our partner lenders or pre-apply online:

Pre-apply for a business loan in 3 easy steps

  1. Take 30 seconds to complete our application online: Simply fill in the form by choosing the options that apply to you.
  2. We find you a lender: We’ll find the most suitable loan provider for your situation.
  3. You get your loan: One of our partner lenders will get in touch to process your application and get you the funds you need (often in just a few days).

How to Compare Your Finance Options


With so many lenders in Canada, using Smarter Loans to compare and choose the right small business loan for your situation is a smart idea.

Here are some important factors to consider when comparing services:

Loan Amount

The amount you can qualify for is largely determined by your income, credit, debts, and whether or not the funds you borrow are secured against your business.

Repayment Terms

Repayment terms dictate how much your monthly payments will be and how long they’ll continue until you’ve repaid your loan (plus interest) in full.

Interest Rate

While interest rates determine the cost of borrowing, you can often get a lower rate by putting up a business asset (like real estate, for example) as collateral.

Fees

It’s important to find out if the financing you’re considering comes with any upfront or ongoing fees.

What Size Loan Should You Take?


Businesses come in all shapes and sizes, and as a result, the financial needs of entrepreneurs can vary significantly. Whether you’re looking to secure a modest sum of a few hundred dollars or aiming for a more substantial financial boost of $500,000 or beyond, the key to making the right decision lies in having a well-thought-out plan for the utilization of those funds.

Choosing the correct business loan is not merely about acquiring the maximum possible sum, but rather about aligning your financing with the specific goals and needs of your business. It’s essential to carefully assess what your business requires to thrive and grow, considering factors such as expansion plans, marketing initiatives, machinery upgrades, or hiring additional staff. By doing so, you can ensure that the funds you secure are put to the most productive use, driving revenue growth and enhancing the overall health of your business.

Having a clear plan for how you will leverage the financial advance is not only beneficial for achieving your business objectives but also critical for managing your finances effectively. It enables you to allocate resources efficiently, allocate budget, and make informed decisions that contribute to your business’s success.

Moreover, a well-defined plan also plays a pivotal role in your ability to comfortably repay the borrowed amount within the agreed-upon terms. When you use the loan strategically to generate revenue and improve your business’s financial position, you create a positive cycle of growth. As your business prospers, you generate the income necessary to meet your repayment obligations, reducing the financial strain and potential risks associated with borrowing.

Calculate Your Monthly Payments

Here’s a simple example:

Let’s say you want to borrow $5,000 at an interest rate of 10% over 2 years.

If the repayment frequency is monthly, your payment amount would be $230.72 per month.

Use the calculator below to get an estimate of what your monthly payment will look like when you apply to a lender through Smarter Loans.

Business Loan Calculator

$5k$30,000$500K
$0k$5,000$250K
1%10%50%
1 year2 year term5 years
$
$

Your Payment Details

Your Payment Details

"Below you will find a detailed breakdown of your payments in each month and each year. Find out how much interest, principal and total you'll be paying with the information you entered. Change your term length, interest rate and loan amount to see how it impacts your payment breakdown."

Common Loan Eligibility Criteria


Banks and other lenders take various factors into account when evaluating a company’s eligibility for funding, including the business’s financial stability, cash flow, profitability, and the personal credit histories of its owners. To navigate this process effectively and mitigate the impact on your credit score, it’s crucial to understand the qualification for your desired business loan. Each loan application, whether approved or declined, can affect your credit score, making it imperative to target your applications wisely. Having a well-drafted plan, clear financial goals, and the necessary documentation, such as financial statements and tax returns, is essential for instilling confidence in moneylenders and streamlining the application process. Being well-informed and adequately prepared not only increases your chances of securing financing but also ensures that your application aligns with the lender’s requirements, ultimately increasing the likelihood of approval for your business loan.

In addition to your personal income and resume, here’s what entrepreneurs often need to show to get approved for financing:

Appraisal of assets

For a secured loan, most lenders will request an asset appraisal to ensure your collateral is sufficient should you have trouble making your repayments in full.

Financial statements

Monthly revenue numbers and cash flow projections go a long way to showing lenders the health of your finances and your ability to repay what you owe.

Credit and debt history

A bank or financing company will usually look at both your personal and business credit approval scores as part of their application process.

Business plan

Most lenders will want to see a detailed business plan outlining your objectives and how you intend to use any borrowed resources.

Taking the time to research and prepare thoroughly not only increases your chances of securing financing but also streamlines the request. By aligning your business’s financial health, creditworthiness, and documentation with the lender’s criteria, you can approach the enrollment process with confidence, knowing that you’re well-positioned for success. Ultimately, being well-informed and adequately prepared can make a significant difference in the approval of your business loan application.

Frequently Asked Questions About Business Loans


1. What type of credit score is needed for a business loan?

While there is no one magic number that enables small companies to receive the financial resources they need, a higher credit score works to the benefit of the borrower. As a general rule, higher credit rating (either the business, or the business owner) will increase the chances of getting approved for a business loan.

2. How important is cash flow to receive business financing?

This depends on the type of business loan calculator is being obtained. For unsecured (no other assets as collateral) loans, cash flow is very important, because that’s how the lender evaluates the business’s ability to repay the loan. Daily and monthly sales numbers, especially through debit and credit cards, are a critical factor for business loan approval. For secured loans, where business assets such as equipment or real estate is used, the cash flow may be slightly less important.

3. What is an SBA loan?

For organizations that have a track record of operations in Ontario and across Canada, the Small Business Administration (SBA) provides funding programs through SBA-approved lenders. While the lender (mainly banks and financial institutions) provides the capital, the SBA guarantees up to 85% of the loan amount, which helps the business owner obtain a lower interest rate. Depending on each individual business profile, the owner can gain up to $5 MM of SBA-backed financing with loan terms from 5 up to 25 years. However, an emphasis is placed upon credit scores and established histories when evaluating companies for qualification.

4. Can business loans be used for refinancing other debts?

When a business seeks financing from a bank, it’s essential to specify how they plan to use the funds they borrow, whether for marketing, technology upgrades, or debt refinancing. Transparency ensures alignment between the bank funds and the company’s financial objectives. Refinancing at any date, with a business loan from a bank can offer several benefits. First, they can take advantage of reduced interest rates, leading to savings, capital gains, and a more manageable repayment process. Additionally, they can consolidate multiple debts with varying interest rates into one loan, simplifying their payment schedule. When companies borrow money it can also enhance their cash flow, especially with loans that have lower monthly payments. Lastly, by borrowing from a bank to refinance, companies can ensure their assets remain unencumbered, promoting financial stability.

5. When should business loans NOT be used?

While it is ultimately the owner’s discretion and/or company policy that determines how the capital structure is formed, best practices for debt management include being vigilant with it particularly in cases where the business is in trouble. For example, it is not advised to use a business loan to pay overdue bills and employee salaries when the business is not profitable. Business loans should be used to increase revenue and grow a business, so that the there is a positive return on investment after the funds are used up. A great example of this is purchasing inventory that is expected to sell during a busy season, or investing to open a patio for a restaurant, which will bring in extra revenue.

6. Who is eligible for a small business loan?

Small business loans are relatively easy to obtain as long as a business has been operational for at least a year and generates at least $10,000 in monthly revenue.  To qualify to apply for business loan and receive funding, business owners need simply to complete an application (online or at specialist lenders) and provide access to their business’s registration details and financial statements, as well as credit profile. While size is not a direct consideration, lenders will want to look at a consistent history of revenue generation, so they can feel confident in a business’s ability to repay the loan.

7. Is a personal credit score and business credit profile the same thing?

No, the personal credit score in Canadian provinces and territories is a number between 300 and 900, with 300 being the lowest and 900 representing excellent creditworthiness. This score is a crucial factor in many financial transactions, including personal loans, mortgages, and credit cards. However, when it comes to businesses, there isn’t a direct equivalent to a personal credit score. Instead, credit bureaus have developed specialized scoring systems tailored to assess the creditworthiness of businesses.

These business credit scores evaluate various aspects of a company’s financial behavior, such as its payment history, outstanding debts, and the length of time it has been in business. This information helps moneylenders and creditors gauge the level of risk associated with extending credit to a particular business. The scoring systems aim to provide a comprehensive view of a company’s financial health, offering insights that go beyond what can be gleaned from personal credit scores.

It’s important for organizations in Canada to monitor and manage their credit scores, as these scores can significantly impact their ability to secure financing, access credit lines, and establish relationships with suppliers and creditors. A positive business credit score can open doors to more favorable loan terms and business opportunities, while a lower score may lead to higher interest rates and greater scrutiny from potential moneylenders. Understanding and actively managing your business credit is essential for maintaining a healthy financial profile and ensuring access to the funding necessary for growth and success.

8. Is a business plan necessary?

This depends on the type of new or existing business loan being obtained. While most small business lending companies will want to see how the small business will deploy the funds, a well-formulated business plan may not be a requirement. In the case that it is necessary though, it is important to answer the bank the following questions:

a) What the small business loan will be used for (additional funding “cushions”, expansion, equipment/technology purchase inventory purchases, working capital, funds for supplier/employee payments, capital expenditures, cash flow purposes etc.)

b) Expected business and economic conditions over the next 2-5 years

c) How they will impact profitability and financial strength

9. I’m considering doing business internationally. What do I need to know?

If you are currently exporting or considering exporting outside of Canada, you need to carefully consider your strategy. Thankfully, there are great resources available to you.

General Inquiries:  

Smarter Loans has teamed up with Export Development Canada to help Canadian companies navigate global funding opportunities. Their unique suite of funding solutions can help you offset the risks of doing business abroad, finance your deal and access the working capital you need.

Want to learn more about how EDC can help? Send your inquiry to an EDC Trade Advisor today

Credit Insurance:

To keep your financial situation secure, consider talking to an Export Development Canada (EDC) Trade Advisor. EDC has solutions that can protect you against the risk of not getting paid when doing business beyond our borders and help you get more cash to grow your exporting business.

Learn more about EDC’s Solutions Here.

10. How to select the best lender?

When looking at different moneylenders for small business financing, it is important to consider a broad list of items before committing to one lending option. While it is tempting to take the offer with the best rate, a lender should be viewed through the lens of a business partner. In the same way that a great one Canada small business financing and partner can improve the company, a great lender can provide your business with the resources to take it to the next level. As such, the following should be considered, weighed, and decided upon:

a) Their policy frameworks (application processes, information requirements, and ALL fees)

b) Ancillary services they offer (e.g. transaction banking regular payments solutions)

c) Term of the principal loan (measured in years or months)

d) Variable or fixed rates (possibly adjusted to real rates to account for inflation)

e) Funding amount offered and how it matches with the capital that is needed.

11. Can a business based out of a home qualify for such a loan?

Absolutely, if the business meets the necessary qualifications set by the government, bank or the lender, it can indeed be operated from a residential living arrangement. This flexibility is especially valuable for small business owners and entrepreneurs who may not have access to a traditional commercial space or prefer to run their operations from the comfort of their homes.

Operating a business from a residential location has become increasingly common in recent years, thanks to advancements in technology and changing work dynamics. Many companies, particularly startups and small enterprises, have embraced the concept of a home-based business. This approach not only reduces overhead costs associated with renting or leasing commercial space but also allows business owners to achieve a work-life balance that suits their needs.

However, it’s essential to note that while many moneylenders do accommodate companies operated from residential premises, they may have specific criteria or restrictions that companies must meet. These criteria could include compliance with local zoning regulations, ensuring that the residential location is suitable for business purposes for the type of business being conducted, and demonstrating a stable and profitable operation.

Moreover, some moneylenders may be more inclined to finance a home-based business if they have a solid business plan, a track record of revenue generation, and a clear strategy for growth. Providing comprehensive documentation that showcases the viability and sustainability of the existing business, can be crucial in securing financing.

In essence, the location of a business, whether it’s based in a residential setting or a commercial space, is becoming less of a barrier to obtaining financing. Moneylenders are increasingly focused on assessing the overall health and potential of the business, rather than the physical location from which it operates. This shift in perspective provides greater opportunities for entrepreneurs to pursue their business dreams, regardless of where they choose to establish their business headquarters.

12. What is a private business loan?

Private business loans encompass a broad category of financial arrangements that involve companies securing funding from non-bank lenders. These lenders can take various forms, including online moneylenders, private lending companies, family members or friends, venture capitalists, or even traditional brick-and-mortar financial institutions, like a bank and other businesses. Regardless of the source, these loans fall under the umbrella of private loans, serving as an alternative financing option for businesses.

For many small companies, especially new ventures, the prospect of securing funding can be both essential and challenging. Traditional banks often have strict lending criteria that can be difficult for newer or smaller enterprises to meet. This is where private loans come into play, offering an attractive alternative to address the financing needs of companies that may not align with a bank’s lending standards.

Interest associated with private loans can vary widely depending on the lender’s policies and the perceived risk of the borrower. Consequently, it’s crucial for organizations to carefully evaluate their options and assess the terms and conditions, particularly the interest, to ensure they align with their financial capabilities and repayment ability. Managing interest payments effectively is essential to avoid excessive financial burden and ensure the loan remains a beneficial source of funding.

One of the advantages of seeking private business loans is the flexibility they offer. Businesses can choose from a diverse array of private moneylenders, each with its unique competitive advantages and reputation. This freedom enables small businesses to select a lending partner that they trust and believe can meet their specific financing requirements.

Assets, both tangible and intangible, often play a significant role in securing private funding. Lending institutions may require collateral, such as equipment, real estate, or intellectual property, to mitigate their risk when extending loans. For new and small businesses, this can be a crucial consideration when exploring private financing options.

Private business loans have emerged as a valuable resource for small and new businesses seeking funding outside of traditional banking channels. These loans offer flexibility and a broader spectrum of financing options. However, it’s essential for businesses to exercise due diligence in evaluating their options, assessing interest rates, and managing interest payments effectively.

13. Can I apply for a small business loan online and use a business loan calculator for assistance?

Applying for small business loans online is extremely common, and thanks to streamlined and convenient with some offering a business loan calculator online with their application process and systems, it takes very little time and effort to apply. Most lending institutions now have an online loan application option.

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