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Methodology for rating business loans

Transparency, costs and customer experience factor into how we rate the best business loans.

Our editors objectively compare business loans and rank them on several benefits and features to give you an overall rating of how useful each loan might be.

Our ratings

We rate business loans using a system of one to five stars.

★★★★★ — Excellent

★★★★★ — Good

★★★★★ — Average

★★★★★ — Subpar

★★★★★ — Poor

Keep in mind, however, that our “top” picks may not always be best for you. Based on your situation, you may find certain features to be more or less important, so compare your options before you apply. While we looked at a range of business loans available for our “top” picks, we did not compare all the products available in the market.

How we rank business loans

We consider 9 factors when comparing business loans.

How we rate minimum loan amounts

★★★★★ — Under $500

★★★★★ — $501 to $1,999

★★★★★ — $2,000 to $9,999

★★★★★ — $10,000 to $19,999

★★★★★ — $20,000+

Business loan lenders tend to offer a wide range of minimum loan amounts. Some can start as low as $500, while others might be as high as $10,000. Loans that come with a lower minimum amount provide more flexibility and cater to a wider range of borrowers, and thus earn a higher star rating.

How we rate maximum loan amounts

★★★★★ — $500,000+

★★★★★ — $350,000 to $499,999

★★★★★ — $250,000 to $349,999

★★★★★ — $100,000 to $249,999

★★★★★ — $99,999 and under

Most online business loans cap out around $500,000 in Canada. Options generally sit between $100,000 to $500,000, so the lower the maximum, the lower the star rating.

How we rate turnaround time

★★★★★ — Next business day or sooner

★★★★★ — 2 to 4 business days

★★★★★ — 5 to 14 business days

★★★★★ — 15 – 31 business days

★★★★★ — Over 1 month

We define turnaround time as the time it takes to apply for the loan and get your funds. Since it can vary depending on loan amounts and other factors, we look at the minimum turnaround, rather than the whole range.

Lenders that offer funding as fast as the next business day — or sooner — get the best rating. Those that take more than a month get the lowest score.

How we rate starting APRs

★★★★★ — Below 5%

★★★★★ — 5% to 9.99%

★★★★★ — 10% to 19.99%

★★★★★ — 20% to 29.99%

★★★★★ — Over 30%

Business loans tend to come with higher APRs than personal loans. We consider APRs that start below 5% to be highly competitive. Those starting at 30% and above get the lowest score. We skip this category for lenders that don’t disclose APRs.

How we rate fees

★★★★★ — Origination fee — or no fees altogether

★★★★★ — Prepayment penalties, NSF fees, late fees

★★★★★ — Extra fees — like documentation, closing or annual fees

Origination or establishment fees are fairly common on a business loan. Any lender that only charges an origination fee — or no fees at all — gets our highest rating. A lender that charges a penalty if you pay off your loan early gets a 2-star rating, with or without an origination fee. And a lender that charges extra fees in addition to an origination fee — such as documentation, closing or annual fees — gets a 1-star rating.

How we rate transparency

★★★★★ — Displays APR, fees, loan terms, loan amounts and eligibility requirements on website

★★★★★ — Displays 3 or 4 of the criteria for a 5-star rating

★★★★★ — Displays 2 of the criteria for a 5-star rating

★★★★★ — Displays 1 of the criteria for a 5-star rating

★★★★★ — No product details available on its website

Transparency measures how much information is available about a business loan before providing personal information or starting an application. Those that display the most product details on their website score 5 stars. Those that don’t provide product details at all earn 1 star.

How we rate customer service options

★★★★★ — Live chat, phone number, email and social media accounts

★★★★★ — 3 of the criteria for a 5-star rating

★★★★★ — Phone number and email

★★★★★ — Phone number or email — not both

★★★★★ — No contact information or just an email form on its website

Our customer service score is based on how easy it is to get in touch with a lender. Those that have the most ways to reach out get the highest scores. Those that only have an email form on their website or no contact information at all earn just 1 star.

How we rate the online application

★★★★★ — Has an online application

★★★★★ — Extensive phone call required

★★★★★ — Doesn’t have an online application or must visit branch

This is a chance for lenders to earn an extra 5 stars. Lenders that offer a fully online application earn 5 stars. Lenders that require a branch visit or extensive phone exchange earn less stars.

How we rate bonus features

★★★★★ — Meets all 3 perks

★★★★★ — Meets 2 perks

★★★★★ — Meets 1 perk

★★★★★ — Meets 0 perks

We want to give lenders that offer something extra to borrowers a chance to have that reflected in their star rating. If a lender checks off any of the following features, it earns bonus stars:

  • Works with high-risk industries, franchises or nonprofits
  • Works with poor-credit borrowers, businesses less than 6 months old or startups
  • Has lenient revenue requirements equivalent to $5,000 a month or lower

How we rate merchant cash advances

Merchant cash advances give your business an advance on future sales, which you pay back over a fixed number of months — plus a fee. For this type of financing, we consider many of the same criteria as business term loans — with two key differences. Instead of interest, we look at the factor rate and whether the company charges additional fees that add to the total cost of the advance.

How we rate factoring companies

Factoring is generally designed for larger amounts of financing than a business term loan and acts as an advance. Instead of looking at minimum amounts, we consider the maximum percentage of an invoice you can have advanced.

We also look at the minimum factoring fee or its equivalent at a monthly rate. And companies that offer nonrecourse factoring earn a few extra points, since you aren’t responsible for the invoice if your client doesn’t pay.

What we don’t consider

Our star ratings don’t consider everything you need to know about a lender. Read our reviews to check out the following features before deciding to apply with a lender.

  • Loan terms. Look for a term that offers monthly repayments your business can easily afford without staying in debt longer than it needs to. Terms generally range from 6 to 18 months.
  • Availability. Check to make sure a lender offers loans to residents of your province or territory.
  • Eligibility requirements. Most lenders consider your credit, time in business and revenue at a minimum.
  • Specializations. Some lenders specialize in funding certain industries or types of businesses, which might make them a better fit for your specific needs — even if they have a lower star rating.
  • Repayment frequency. Term loans typically come with monthly repayments. However, some providers charge bi-monthly, weekly or even daily repayments. Make sure the pay frequency fits your business’s cash flow before signing on.
  • Business hours. If you expect a lot of back and forth on your application, make sure the lender is open at a time when you’re available to talk on the phone or stop by a branch.

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