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$100,000 business loans
To get a $100,000 business loan, you'll probably need to be in business for at least a year and earn at least $5,000 monthly in revenue.
A business loan of $100,000 can help fill gaps in your cash flow, hire the right people or provide the equipment or vehicles your business needs to get to the next level. Qualifying for a loan of $100,000 is possible, but you’ll need to meet the eligibility criteria which usually includes a minimum credit score, annual revenue and number of months or years in business.
Where can I get a $100,000 business loan?
Many Canadian financial institutions such as banks, credit unions and online lenders offer $100,000 business loans. You may even qualify for a CSBFP loan, which is primarily backed by the government and comes with favourable terms designed to support small- and medium-sized businesses.
BDC Small Business Loan
With a small business loan from the BDC, you can get up to $100,000.00 online to fund any business expense. There are no application fees, and no personal assets are used to secure the loan (but you will have to provide a personal guarantee). Repayment terms are 5 years, and you can postpone capital payments for 6 months. There are no penalties for paying off your loan early. Eligibility requirements include:The BDC offers a very competitive rate on small business loans. The interest rate is normally the BDC’s Floating Base Rate of 4.55% plus a variable rate of 1%-12%. However, as of March 31, 2020, the BDC has temporarily lowered the interest rate to 2.80% in light of COVID-19. (The interest rate is subject to change without notice).
- You must be a Canadian citizen or permanent resident
- You must have a Canadian-based business
- Your business must be generating revenues for at least 24 months
- You must have a good credit history
- You must be at least the age of majority in the province or territory where you live (either 18 or 19 years old)
Banks and credit unions
Although all of Canada’s major banks can help you apply for a CSBFP loan, Scotiabank offers its own in-house business loans of up to $1 million and BMO offers commercial mortgages of up to $1 million to buy or refinance business real estate. You can also get financing from credit unions such as Coast Capital, which offers short-term loans of up to hundreds of thousands of dollars as well as term loans and lines of credits in varying amounts.
You may be able to find an online lender offering $1,000,000 – but it’s unlikely. If you do, you’ll likely need an annual revenue of at least $200,000, a good to excellent credit score and have been in business for a couple of years at minimum.
Secured business loans for $100,000
It’s possible to find both secured and unsecured business loans. Secured business loans must be backed by an asset and sometimes require a specific purpose — such as buying a vehicle, equipment or real estate. You can, however, find secured loans that can be used for any legitimate business purpose. This means you’ll need to offer up collateral – whether it’s something you already own or a tangible item that you plan to buy with your loan funds.
Secured loans aren’t just an option for a business that just meets the requirements for a $100,000 loan – it can also help your business qualify for more competitive rates and terms. A secured loan is far less risky for the lender, since if you default on the loan your collateral could be seized.
What do I need to get a $100,000 business loan?
For a loan this size, you’ll need to meet stringent eligibility requirements. While requirements vary between loan providers, you stand a good chance of approval for $100,000 in financing if you can check off most of the boxes below:
- Annual revenue of at least $5,000 a month. Some lenders will require that you earn at least $5,000 a month, while others will require you bring in at least $100,000 a year. You’ll want to prove that you bring in enough money to comfortably afford the monthly repayments on a $100,000 loan.
- At least one year in business. Typically the longer you’re in business, the better. Many lenders want to see at least one to two years in business for loans as large as $100,000.
- Good personal credit. Though it’s possible to find financing with a lower credit score, you’ll find more competitive rates with a score of 650 or higher. Business loan lenders usually check your personal credit score – instead of your business credit score – to determine whether you’ll be approved or not.
- Consistent cash flow. Your business must prove that money comes in consistently enough that you’ll be able to comfortably afford your monthly loan payments.
What credit score do I need?
Credit score requirements vary widely by lender. Some lenders may require at least a minimum of 650 – a ‘good’ credit rating – while others may require you to have a ‘very good’ to ‘excellent’ rating of 720 or higher. Most lenders won’t approve you if you have a credit score under 600.
Generally the higher your credit score, the more loan options available to you – and the better the rates and terms.
Compare $100,000 business loans from these providers
Steps to get a $100,000 business loan
Major banks may offer loans of up to $1,000,000 for qualifying businesses, but you can also turn to the Canada Small Business Financing Program (CSBFP) to get this type financing on competitive terms. Although each lender has its own process, these steps can serve as a general guide to finding the right loan option for your business:
- Compare lenders. Your first step should be to compare business loan lenders. Each lender has its own requirements that can make the difference between approval and rejection.
- Prepare financial documents. Lenders want to see your business plan, annual revenue projections, bank statements, tax documents and other information that demonstrates your business’s ability to repay a loan.
- Speak with a financial advisor. Loop a financial advisor into your plan for a $100,000 business loan to ensure your business can afford it and develop a plan to repay it.
- Apply for preapproval. This allows you to see your loan’s potential terms before your personal or business credit is officially checked. Not all lenders offer preapproval, but if it’s available, take advantage of it.
- Review and sign the loan contract. If approved, review your loan contract with your partners and financial advisor to ensure the terms are beneficial for your business.
How much does it cost to repay a $100,000 business loan?
Your loan repayments ultimately depend on the APR and loan term you find. APR is a representation of your loan’s rates and fees, expressed as a percentage. Your loan term is the time you have to repay your loan in full.
Online business term loans typically come with APRs that range from 5% to 29%. Term loans can go up to seven years, but your typical $100,000 business loan comes with a term of around three to five years.
For a $100,000 loan with a 20% APR and a three-year term, your business’s monthly repayments would be $3,716.36. You’d pay a total of $33,788.90 in interest and fees over the life of the loan.
Case study: Thorn Tree Brewers buys new barrels
Let’s say that Thorn Tree Brewers wants to expand its production. Thorn Tree’s owner, Spencer, crunches the numbers to discover he needs a $100,000 loan to cover the costs of more barrels. Spencer compares several online lenders, narrowing his options to three providers. He applies to prequalify with all three, learning the APR and terms he’d face with each.
|Lender||APR offered||Term||Est. monthly repayment||Est. total cost|
|Provider #1||30%||1 year||$9,748.71||$16,984.55|
|Provider #2||24%||3 years||$3,923.29||$41,238.27|
|Provider #3||18%||3 years||$3,615.24||$30,148.62|
After reviewing the numbers, Spencer continues his application with Provider #3. It might require paying more interest over the life of the loan than provider #1, but its monthly repayments are more in line with Spencer’s budget than the other options. And he’ll save more than $11,000 in interest and fees than if he chose provider #2.
Business loan calculator
If you have multiple loan or refinancing offers on the table and aren’t sure which one to choose, calculate the total cost of each loan option to decide which one will best meet your business’s financial needs:
How do I use the business loan calculator?
To determine how much your business loan will cost you, simply fill out the following fields in the calculator:
- Loan term and amount. Select how long you need to repay the loan and enter the amount you intend to borrow.
- Bank name. Enter the names of your lenders.
- Fixed rate and period. If your loan comes with a special introductory fixed rate, enter the rate and how long the intro period lasts.
- Ongoing rate. Enter the ongoing rate you’ll pay for your loan here.
- Upfront fees. If your loan has an origination or application fee, add it here.
- Fees. If the loan comes with any ongoing fees, you’ll need to add them here and select how often they’re charged.
- Prepayment penalty. If you’re charged a prepayment penalty for paying off your loan early, enter the amount here.
- Calculate. Click the Calculate button to see which lender costs less and each lender’s fixed, ongoing and total repayments.
If a section in the calculator doesn’t apply to you, leave it blank. You can adjust the loan amount, term length and any other variables to help you get an accurate idea of how much you can borrow and what sorts of terms to look for when applying with different lenders.
$100,000 business loans are for businesses that have been operating for one or more years and earn a monthly revenue of at least $5,000. While good personal credit isn’t absolutely necessary, your options may be limited with a credit score that’s under 650.
Want to learn more? Head to our business loans guide.
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