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A quick guide to business loans and your credit file

Seize control of your credit rating and take the first steps towards getting the working capital your business needs.

Business loans can be a stepping stone to financial growth. The key to being approved for a loan is understanding your credit file.

If you’re a small business owner, you’re probably familiar with the long wait before you find the outcome of a loan application. Being denied access to credit is frustrating when you’re looking to get your business started or take it to the next level. Learn how your credit file works and improve your chances of being approved.

Business lenders you can compare

Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
Prime pricing from 9.00%
$500 - $250,000
6 - 120 months
$10,000 /month
100 days
Unsecured Term, Merchant Cash Advance, Invoice Factoring
To be eligible, you must have been in business for at least 100 days with a minimum of $10,000 in monthly deposits.

SharpShooter provides capital to small businesses that are underserved by banks and credit unions. It measures overall business health and potential rather than focusing strictly on traditional metrics. Fill out a simple application and get pre-approved in minutes. Receive your funds within 24 hours.
Swoop Funding Business Loan
4.00% - 25.00%
$1,000 - $5,000,000
3 - 60 months
$10,000 /month
24 months
Term, MCA, LOC & more
To be eligible, you must have been in business for at least 24 months and have a minimum of $100,000 in annual revenue.

Swoop partners with banks and alternative lenders to match your business with the right funding options. Register for free and browse your offers without affecting your credit score.
Lending Loop Business Loan
Starting at 4.96%
$10,000 - $500,000
3 - 60 months
$8,500 /month
12 months
P2P
To be eligible, you must have been in business for at least 12 months and have a minimum of $100,000 in annual revenue.

Lending Loop is Canada’s first regulated peer-to-peer lending platform. Complete an application in 5 minutes. Once you accept your loan offer, investors will begin to fund your loan on the marketplace. Your loan will be transferred to your bank account when it is fully funded.
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$10,000 /month
6 months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum monthly revenue of $10,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
Loans Canada Business Loan
Prime Pricing from 9.00%
$2,000 - $350,000
3 - 60 months
$4,166 /month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $350,000. Complete one simple online application and get matched with your loan options.
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What is a credit file?

A credit file is a comprehensive document which is created for any business or individual who has made an application for credit, whether that credit has been approved or not. Activities included in your credit file can be interactions with a traditional credit provider such as a bank or lender, or with a utility provider.

What’s the difference between a personal and company credit file?

Your personal credit file contains a record of applications you’ve personally made for credit, as well as accounts you’ve held in your name. It helps credit providers determine your risk as a borrower.

A company credit file contains information on a company and helps other businesses determine the risk they take doing business with that company. information held on a company credit file can be used to assess the business’ suitability for finance. The personal credit file of directors may also be checked if a business applies for a loan.

What’s included in my company credit file?

Your company credit file includes both positive and negative information about your business and its activities:

  • Company details. Relevant information such as the company structure and shareholders.
  • Credit information. This includes any applications you’ve made for credit, accounts you’ve defaulted on, court judgments and external administration.
  • Business events. Any relevant business events that have been lodged with the CSA/ACVM (Canadian Securities Administrators) will be included. This can include credit inquiries, shareholder data and company information.
  • Personal Property Securities Register (PPSR). Any details from the PPSR for the province or territory in which your business is located will be included. The PPSR holds data on personal property used as collateral to secure loans.
  • A score. The credit file will summarize your business with a single-figure score. This score should be based on statistical best practice. It will often determine whether or not the business is approved. Similar to personal credit scores, company credit ratings are numerical.

What is a business credit score?

Business credit scores can vary between Canada’s 3 main business credit reporting bureaus: Equifax, TransUnion and Dun & Bradstreet (D&B).

Equifax issues 4 different business credit scores:

  • Credit Information score (0-70 where 41+ is high risk)
  • Business Failure Risk Score (1,001-1,722 where higher is better)
  • Commercial Delinquency Score (101-662 where higher is better)
  • Payment Index score (0-99 where 60+ is high risk)

TransUnion’s business credit score ranges from 400-800, with 800 being the best.

The D&B Commercial Credit Score ranges from 101-670, with 670 being the best.

How to build business credit

Can I improve my company’s rating?

Your credit score isn’t set in stone. You can take control of your income and outgoings and dramatically improve your credit score over time. Keep the following in mind for a good credit score:

  • Pay your bills early or on time. This may sound obvious, but many businesses underestimate the impact this can have on a credit rating. It can also affect your relationship with suppliers and partners.
  • Maintain a low balance on company cards. As with overdue payments, high totals on multiple credit cards will do little to instill trust with potential lenders. Learn more about business credit cards and compare popular cards in our guide.
  • Communicate with your creditors. Don’t be afraid to negotiate with suppliers if you feel that modified, flexible terms regarding your repayments could help your company better manage your finances. Ultimately it will benefit them as well.
  • Don’t delay improving your finances. Improving your credit rating takes time and it is unlikely that you will see real change for at least a few months. However, the sooner you get your payments current, the sooner the process can begin.

My file is back on track. Now what?

With your finance in order, it’s up to you to secure the right business loan for your firm. Keep the following tips in mind before you submit your next business loan application:

  • Look through your credit history. You can check your credit history for free from Canada’s 2 main credit bureaus – Equifax and TransUnion. Credit reporting bureaus will also offer quick access to your credit file and credit score for a fee. This fee may also cover credit monitoring services such as debt management recommendations based on your profile and access to financial education resources. Knowing this information puts you in a strong position to negotiate and answer difficult questions about any negative listings.
  • Be honest. Lenders can view your credit file and will be able to find out if you have been rejected for a business loan. They can also see how many lenders you’ve applied for in the last 2 years. Being dishonest with this information will only hold your application back.
  • Do your research. There are many loan options, from prominent lenders such as banks to services specializing in small businesses. Not only will knowing the options available save you time, it also gives you the power to bargain for exactly the kind of loan you want.
  • Have your paperwork ready. Before you step through the door of your chosen lender, make sure you have a complete set of documents to support your application. Bank statements, invoices and projections will all add weight and help convince the lender that you can be trusted with their money.

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