Searching for a loan to finance your business in Ontario? You’re in the right place! From the many business loan lenders in Ontario, we have compiled a shortlist of just the most competitive loans from the most reputable lenders. Browse the Smarter Loans table below to find their details; or, if you need some assistance choosing the right provider, pre-apply with Smarter Loans. We will review your information and connect you with the best small business loan lender in Ontario for your specific needs. Getting a business loan has never been so simple!
Before approaching any business loan lender in Ontario for funding, you should ensure you have some basic paperwork, including business legal documents, financial documents, and a well-articulated plan that outlines the loan’s intended use. Essentially, you need to be able to demonstrate what the money’s for, why the loan is a good idea, and to prove you will be able to pay it back.
You can then move onto selecting the right Ontario business loan lender and business loan type for your needs. See more on this below; choosing the right tool for your financing needs is crucial. Once chosen, you can complete an application form with the business loan lender, remembering to include all of the supporting documentation relating to your business. And that’s it! A decision on your Ontario business loan should be with you within a few days to a few weeks (depending on the lender).
There are a myriad of business loan lenders in Ontario, each with their own distinct eligibility criteria and characteristics. They include:
Every business loan lender has advantages and disadvantages – there is no perfect solution for everybody. So it’s important to pick one that prioritizes the same things you do.
It’s also worth noting that there are multiple development programs in Ontario which are designed to assist businesses that might not meet the stringent lending criteria of more traditional business loan lenders, such as banks. Not least among these is the Canada Small Business Financing Program, which supports the pursuit of entrepreneurial ventures in various industries by reducing the risk for a business loan lender, and thereby enhancing Ontario business loan accessibility.
A crucial aspect of getting an Ontario business loan is choosing the right type of loan for your company’s needs. There are many types of business loan, including:
Each one of these business loans can differ fundamentally in terms of: available loan amount, repayment schedule, repayment method, loan term, possible loan uses, applicable fees, loan cost, source of loan, which companies are eligible for loan approval, and so on. Because of this variety, the first step in choosing the right type of business loan in Ontario for you is understanding:
Answering these questions will narrow down the list of available Ontario business loans to just those suitable for your needs; you can then move onto selecting the right business loan lender of that type of loan, and finding the best business loan rates in Ontario for your situation.
Ontario business loans come in a range of sizes, and can vary between business loan lenders, and also between applying businesses. Most Ontario business loans are between $10,000 and $50,000, but borrowing amounts are available from just $500, to $500,000 or more. Generally speaking, the larger the loan amount, the stricter the eligibility criteria and the more in-depth the application process will be.
Ontario business loans can be used for a wide range of purposes, including:
Most small business loans in Ontario can be used for multiple purposes simultaneously. For example, if a business needs funds for employee-related expenses, equipment upgrades, and working capital needs, then many of the business loans available in Ontario are appropriate, as they can be used for all of these purposes. During the application process, a business must state (broadly) how the loan funds will be used, but there is no requirement to limit the funds to one type of expenditure. So online business loans, installment loans, working capital loans, term loans, short term loans and business lines of credit are all multi-purpose.
There are a few exceptions to this; commercial mortgages, vehicle loans and equipment loans are all good examples. All of these must be used for specific purposes – real estate costs, vehicles and equipment, respectively. They can’t be used for payroll, for example. And some programs (for example, the Canada Small Business Financing Program) may have some restrictions on how you can use their financing too.
Business loans in Ontario are available at a broad range of interest rates, depending on the type of loan and the borrower. The average interest rate on a standard installment business loan in Ontario is around 7-10%, but it can be as low as 6% or as high as 50%. Other types of Ontario business loan may charge much more. For example, business credit cards typically have interest rates of 15-30%. Merchant cash advances have effective rates of 8% to 35% or more. Commercial mortgages, on the other hand, may charge only 4-5%. And the business loan interest rate you qualify for depends on a number of factors related to the business.
Ontario business loan interest rates depend on the loan type in question, the borrower’s profile, and the lender’s terms. More specifically, lenders are likely to study the following:
As mentioned above, shopping around can be key in finding the best business loan interest rates in Ontario. Here are some other ways to secure more favourable terms:
As mentioned above, not every business loan lender in Ontario is equal. Each type of lender has pros and cons; choosing a provider requires you to understand all of these attributes and how they interact with your priorities. As such, you will need to consider each lender’s:
These factors will allow you to select a business loan lender that offers a product that is suitable for you, while also protecting your business’s long-term financial health.
Business loan lenders in Ontario look at a number of criteria when determining eligibility for their business loans, including credit score, cash flow, and business plan. For established companies, lenders will often also assess annual revenue and operational history.
While each business loan lender has their own qualifying rules (which it’s prudent to check before completing an application), there are some general guidelines about qualifying criteria. For example:
Amy Orr is a professional writer and editor with over 10 years of experience in the Canadian, U.S. and U.K. financial markets. She has written for numerous publications on topics as diverse as economic literacy, corporate finance, and technical analysis of numerical data. Prior to transitioning to full-time writing, she worked in the hedge fund sector. Her academic background is astrophysics, and she has a Masters in Finance from the University of Edinburgh Business School.
Jenna West is Smarter Loans' in-house financial writer and content director. She has been covering the Canadian FinTech and finance industry since 2017, including financial trends analysis, industry surveys, regulatory updates and changes in Canadian consumer behaviour when it comes to finance.
