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Small businesses are the backbone of the Canadian economy, but sometimes they need help too. The most obvious source of assistance are loans from banks – more specifically, the Big Five banks of Canada. These financial institutions generally offer the best interest rates and conditions on the market. The only catch is you have to meet the strict criteria for approval.
The list below shows some of the biggest banks in Canada that offer business loans and Canada Small Business Financing Program (CSBFP) loans.
With flexible loan options and a range of financing products to choose from, TD Canada Trust can help you get the money you need to start or grow your small business.
Offering tailored financing solutions for you and your business, RBC provides suitable loan options for every budget.
With its wide array of flexible business financing solutions, Scotiabank can clear you for funding quickly and easily so that you can get back to doing what you do best.
As one of the “Big 5” Canadian banks, CIBC gives businesses the financing they need to grow and expand their operations.
Whatever the size of your business, BMO provides tailored financing solutions to help you stay competitive and realize your full potential.
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Banks are known for their rigid requirements and selective approval processes. However, if you can get approved by a bank, your business loan is more likely to have a lower interest rate and favourable conditions compared to if you applied with another lender. For this reason, many Canadian business owners attempt to apply with banks before exploring other options.
Before you apply, it is helpful to understand what banks look for in an ideal candidate. Below is a list of common bank business loan requirements:
What you need to know about business loan requirements
In terms of the loan itself, there aren’t many differences between non-bank and bank business loans. You will always go through some sort of application process. Once the funds have been dispersed, you start making payments to repay the loan.
The main differences between non-bank and bank loans for small business are in the details. Generally speaking, banks have the best loans available on the market. This includes interest rates, borrowing limits and conditions. However, their approval processes are strict because these offers are reserved for the most ideal borrowers. On the other hand, non-bank lenders generally have looser application processes and are willing to take on more risk in exchange for higher interest, lower borrowing limits and unfavourable conditions.
Comprehensive guide to business loans: Compare banks with 13+ other lenders
If your bank loan is denied or you would prefer to borrow from another lender, you have options. There are four other lender types you can turn to for small business financing:
Banks offer the most lucrative business loans and financing options on the market. However, getting approved can be challenging, especially if you don’t fit the bank’s traditional mold. Thankfully there are plenty of other business financing options available, you just have to do your research.
CSBFP loans are backed by the government for at least 75% of the loan, which means they agree with your lender to take on the burden of repaying at least 75% your loan if you find yourself in default. Because the lender is taking on less risk when giving you money, these loans tend to come with lower rates and fees. For more on the CSBFP here’s a link its official Government of Canada website.
Non-CSBFP loans are conventional loans you’ll find with banks and online lenders. They aren’t backed by the government, and so lenders tend to protect themselves with higher rates and fees.
Because banks tend to be more strict with eligibility and requirements than online lenders, you might not have much luck getting a small business loan if you have poor credit. You should consider improving your credit score, putting up more security to guarantee the loan or having a guarantor/cosigner back the loan with you to strengthen your application.
Yes. Franchisees are eligible to apply for a CSFBP loan, up to $350,000 of which can be put towards leasehold improvements and up to $500,000 of which can be put towards the property the franchise will occupy. (These are the standard loan parameters for all CSFBP recipients.)
For the most part, you may not use CSFBP money for costs related to acquiring a franchise (see below) – you’ll have to find a different way of paying for things like brand licenses and franchise fees. CSFBP funds are meant instead to help cover the cost of physically establishing a franchise, supporting its operations and/or helping it grow.
Eligible expenses include:
See the Government of Canada website for more information.
Veronica Ott was a writer at Finder. She's written for numerous finance and business websites including Loans Canada, Borrowell and Fresh Start Finance. She previously worked as a professional chartered accountant in the private equity and advertising industries.
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