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Sometimes we all need a little extra help to get by, and a small loan can make a huge difference when meeting unexpected expenses or struggling with day-to-day outgoings. A loan of $5000 or less can get you out of a lot of sticky situations. Thankfully, Canada has a plethora of small loan providers for just this purpose, and with Smarter Loans you can find the right loan for you.
Smarter Loans is connected to all of the top providers in Canada, and thanks to our extensive experience helping applicants with their small loan needs, we can steer you in the right direction. And you don’t need to go anywhere – simply browse the lenders shown in the table below to understand all of your options. Review each provider’s interest rates, loan terms and customer ratings right from this page. If you find a lender you like, simply click “Apply Now” to apply.
Or, if you are short on time or unsure which provider is the best fit for your circumstances, pre-apply with us and our experts will research your options and advise you on the most suitable for your needs.
We can help connect you with the small loan providers in Canada.
A small loan is a loan of less than $5000 that can be used for personal expenses in times of difficulty. They are almost always unsecured (not backed by collateral) and are intended for short term, one-off use rather than as a form of ongoing debt management.
Small personal loans work much like other loan types: you borrow a set amount, at a defined interest rate, and then pay back the principal plus interest over the life of the loan. The exact terms of the loan will depend on the lender and your personal financial situation.
Some lenders have minimum borrowing amounts (often $1000); there is also usually an upper cap on the amount that can be borrowed via a small loan ($5000 is standard). Loan duration is usually short, to reflect the emergency nature of the loan; typical terms are between three months and a year. Interest rates are relatively high compared to longer term or secured loans; APRs range from 6% to 35%. Your credit score, amount being borrowed, loan term and financial history will all affect the interest rates and loans you qualify for.
There are 101 uses for a small loan, but they are most commonly needed for:
Given the short term nature of small loans and their cost, it is not advisable to use them for discretionary or optional expenses.
There are a few different types of lenders that offer small loans:
Some banks do offer small loans, but they tend to avoid micro-loans altogether. So if you’re seeking an amount less than a few thousand, a bank probably won’t cater to you. Those banks that do offer small loans have strict credit and income requirements.
Credit unions are nonprofit institutions, so when seeking a small loan they can be one of the most cost-effective routes to consider. However they only cater to members, so you need to have an existing history with the institution in question.
Online lenders are an easy and popular choice for small loans, partly because there are so many to choose from, and partly because of their ease of access. Online lenders have quick turnaround times and simple application processes, so they can be a fast way to access a small loan – ideal for covering emergency expenses. They can however have higher interest rates (especially for borrowers with poor credit) so it’s important to do your research and find a reputable lender with reasonable rates.
For additional information on Personal Loans in Canada, visit the Government of Canada website.
Many people might automatically think of paying for the type of expenses listed above on their credit card, or even by getting a payday loan. The advantage of a dedicated small loan is that it will typically have lower interest rates than either of these other options. Credit card APRs are usually 20%+, and payday loans are intended to be so short term (two weeks or so) that if renewed more than a few times, the very high interest rates end up costing you a lot (many payday borrowers end up paying more in interest than the amount originally borrowed). A small loan has the benefit of known, predictable monthly payments that won’t escalate if you stick to them – making them a safer option overall. This is particularly true if you have good credit and qualify for lower interest rates on your small loan.
As with any loan, each lender has their own specific eligibility criteria that you must meet.
In general, you will need to show proof that you have:
There may also be eligibility criteria related to existing debt payments, income level, and credit score. A common minimum required credit score is 600, although options are available for borrowers with a lower score than this.
When comparing your small loan options, remember to take into account:
As a general guideline, small loans should meet the following criteria:
A small personal loan is not necessarily the best (or only) option for you. If you have a lot of existing debt, adding to your monthly debt payments may not be the best idea, and if you have a poor credit history or minimal or no income, then you will not qualify for bank or credit union loans and will instead be forced to use more expensive lenders with punitive interest rates. If this is the case, always make sure you research all of your options thoroughly before agreeing to take on more debt. Other options may include:
A small loan is a loan of less than $5000. These loans are usually unsecured and short term in nature,
It is possible to get a small loan with no proof of income, but as this is a riskier loan for the lender, they will charge you higher than average interest rates to offset their risk. This makes getting a loan more expensive.
Yes, it is possible to get a small loan even if you have bad credit. Lenders typically require a credit score of 600 or more, but some will accept lower scores under certain conditions, and others even cater specifically to bad credit borrowers. This means that they are more familiar with the challenges facing a bad credit borrower, although they may charge higher interest rates to offset the higher associated risk.
Small loans are usually capped at $5000. For loans greater than this, other types of personal or secured loans are advisable. You do not have to borrow $5000 though – many small loan providers will lend you as little as $1000.
Small loans can be used for almost any expense, but they are most commonly used for unexpected costs (such as vehicle repairs, emergency home repairs, medical bills) or to help with short term cash flow problems (i.e. to pay monthly bills).
Small loans can be found at some banks, credit unions, and online lenders. Online lenders are the most popular choice, as they are easy to access and have fast turnaround times.
Small loans generally have lower interest rates than payday loans, so you pay less overall for the money you’re borrowing. They are also slightly longer term. A payday loan is intended to last a few weeks, while a small loan can last from months to a year.
Qualifying for a small loan starts with some basics: ID, proof of Canadian residency, age of majority, and a bank account. Then, depending on the lender, you may also have to provide proof of income, information regarding existing debts, and your personal information so they can check your credit history. It is possible to qualify for a small loan even with bad or no credit, or with no income, but you may need to seek help from a specialized lender.
The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada’s highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the “GPS of Fintech Lending” by the Toronto Star in 2019.