There are many types of small business loans in Canada that you can choose from based on your business needs. Find out where you can shop for business loans and the features you can expect to find with each loan type. Compare lenders and learn how to apply and qualify for a business loan in Canada.
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Compare various types of short- and long-term financing for small businesses.
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Journey Capital is an online business loan provider that offers fast business loans in Canada ranging from $10,000 to $500,000. It also offers lines of credit up to $50,000. You can apply entirely online or by phone. Full Review
Merchant Growth provides alternative financing solutions for small businesses, including business loans, lines of credit and merchant cash advances. Business owners can borrow up to $800,000, and, once approved, funds are usually released within 24 hours. Full Review
High loan amounts
Multiple loan types
Loans approved quickly
Reasonable interest rates
Requires monthly sales of $10,000
Credit score of at least 550
Not suitable for startups
Loan amount
$5,000 – $800,000
APR
12.99% – 39.99%
Term
6 – 24 months
Interest Rate Type
Fixed
Min. Credit Score
550
Fees
No application fees.
Turnaround Time
24 hours
Serviced Provinces
All of Canada
Our “promoted” products are presented as a result of a commercial advertising arrangement or to highlight a particular feature. Promoted products are not a recommendation, do not indicate a product is the best in its category and do not represent all available products on the market. It is important to compare your options and find the right product for you.
Features of small business loans in Canada
Purpose. Lump sum amount that can be used for many purposes, including expansion, equipment purchases, working capital and debt refinancing.
Loan amount. Varies by lender. Many lenders offer between $500 and $500,000, but some will lend over $1 million.
Term. Terms usually range from 1 to 5 years, but you may get longer to repay larger loans.
APR. Varies by lender. Choose from fixed or variable rates, which typically range from 4% to 39.99%.
Collateral. Some lenders require collateral, and some don’t. You’ll usually get lower interest rates if you secure your loan with business assets.
Eligibility. Whether you qualify often depends on factors like your business size, financial history, credit score and the purpose of the loan.
List of banks offering small business loans in Canada
Bank
Business loans offered
Bank of Montreal
Fixed or variable rate term loans, lines of credit, commercial mortgages, CSBFP loans
TD Bank
Fixed or variable rate term loans, lines of credit, business mortgage, CSBFP loans
CIBC Bank
Fixed and variable rate term loans, lines of credit, business overdraft, agriculture loans and lines of credit, loans for Black-owned businesses, franchise financing, CSBFP loans
Scotiabank
Fixed or variable rate term loans, lines of credit, loans for leasing equipment, real estate lending, agriculture loans, loans for Black-owned businesses, CSBFP loans
Royal Bank of Canada
Fixed or variable rate term loans, lines of credit, asset based lending, equipment leasing, agricultural mortgage, commercial mortgage, business overdraft, CSBFP loans
National Bank
Fixed or variable rate term loans, lines of credit, bridge loans, CSBFP loans
Canadian Western Bank
Fixed or variable rate term loans, lines of credit, construction loans
EQ Bank
Business mortgages, commercial equity line of credit
Business Development Bank of Canada
Fixed or variable rate term loans, lines of credit, commercial real estate, equipment loans, financing for tech companies
Features of bank business loans in Canada
Purpose. Lump sum amount that can be used to cover operating expenses, buy or lease equipment, expand operations, pay for real estate and much more.
Loan amount. Can range from $5,000 to $5 million or more.
Term. Terms usually range from 1 to 5 years, with some lenders offering longer terms.
APR. Varies by lender. Choose from fixed or variable rates that typically range from 4% to 20% (since bank loans are typically reserved for those with good to excellent credit).
Collateral. You’ll usually get lower interest rates if you secure your loan with business assets.
Eligibility. With most banks, you’ll need to be in operation for a certain period of time or meet minimum revenue and credit score requirements.
Prepayment penalties. Some banks may impose prepayment penalties for early repayment of a small business loan in Canada.
List of credit unions offering business loans in Canada
Credit union
Business loans offered
Vancity
Business loans, lines of credit, newcomer business loans, co-op housing loans, agricultural loans, environmental loans
Meridian Credit Union
Business loans, lines of credit, commercial owner occupied lending, land development and construction financing, agricultural financing, hospitality and franchise financing, CSBFP loans
Coast Capital Savings
Business loans, lines of credit, commercial mortgages, CSBFP loans, builder/construction financing
Servus Credit Union
Business loans, commercial mortgages, authorized business overdraft, business leasing, specialized financing for business and medical professionals
First West Credit
Business loans, lines of credit, owner-occupied commercial and industrial real estate
Steinbach Credit Union
Business loans, lines of credit, commercial mortgages
Alterna Savings Credit Union
Business loans, lines of credit, commercial mortgage, letters of credit, community microfinance program
Affinity Credit Union
Business loans, lines of credit, commercial mortgage, leasing, startup loans, community impact loans, CSBFP loans
Prospera Credit Union
Business loans, lines of credit, commercial mortgage, letters of credit, builder/construction financing
Connect First Credit Union
Business loans, lines of credit, commercial mortgage, agricultural loans, overdraft, auto financing
Features of credit union business loans in Canada
Purpose. Some loans are open for any use, while others may be tied to specific purposes, such as funding agricultural or construction projects.
Competitive interest rates. Credit unions usually offer competitive interest rates compared to banks and other financial institutions.
Smaller loans. Most credit union business loans in Canada will be for smaller amounts than banks (typically capping out at $300,000 – $500,000).
Personalized service. Since credit unions are community-based and member-driven organizations, you’ll often get more personalized service.
Flexible loans. Credit unions tend to put your best interests in mind over their own bottom line, so they may offer more repayment flexibility than other institutions.
Membership requirements. You’ll usually need to be a member of the credit union you want to apply with. If you’re not, you can easily sign up for a small fee.
Collateral requirements. You may be expected to provide collateral to secure your loan, especially for commercial real estate or equipment financing.
List of lenders offering equipment financing/leasing
Lender
Business loans offered
SharpShooter
Equipment financing, working capital loans, term loans, lines of credit and more
Econolease
Equipment financing and leasing, working capital loans, buy now/pay later loans
Money in Motion
Equipment financing and leasing, working capital loans, engine repair financing, accounts receivable financing, sale leaseback program
Money Line Capital
Equipment financing and leasing, lease to own financing, commercial mortgages, vehicle loans (truck/trailer), heavy equipment loans
Easylease
Equipment financing and leasing, business loans, asset-based lending, leasing line of credit, sale leasebacks, receivable financing
Canadian Equipment Finance
Equipment financing and leasing, capital and operating leases, leasebacks, term loans, conditional sales contracts, pre-approved equipment lines of credit, bridge financing, US dollar funding
Lease Line
Equipment leasing only
Lease Link
Equipment financing, working capital loans, sale-leasebacks
A One Financial Solutions
Equipment leasing, equipment leaseback, refinancing, invoice factoring, business loans, working capital loans, truck repair and equipment loans home equity financing (through partners)
CWB National Leasing
Equipment leasing only
Essex Lease
Equipment leasing and financing, asset-based lending, equipment rentals, business insurance
Equilease
Equipment leasing only
Guardian Leasing
Equipment leasing and financing only
Spherical Capital Inc
Equipment leasing and financing, lease-to-own, rental conversions, sale leasebacks
LeaseDirect
Vehicle and equipment leasing only
John Deere Financial
Equipment loans and leasing only
Yellowhead Equipment Finance
Equipment loans and leasing only
Toronto Truck Loan
Truck loans and leasing only
TFG Financial
Equipment financing and leasing, vendor and broker financing
Peel Financial
Equipment financing and leasing, lines of credit, invoice factoring, engine repair loans, loan refinancing
Equipment financing and leasing, debt consolidation loans, business growth financing, business acquisition loans, bridge financing
Planet Financial
Equipment financing and leasing only
Key Equipment Finance
Equipment leasing and loans only
Wajax
Equipment and vehicle rentals
Alliance Financing
Equipment leasing, working capital loans, invoice factoring, short-term commercial loans
Vault Credit
Equipment financing and leasing, working capital loans, commercial mortgages
Features of equipment financing and leasing in Canada
Purpose. Lets you buy or lease equipment or vehicles you need for your business.
No need to purchase equipment outright. By leasing or financing equipment, you can preserve your capital for your daily operations.
Tax benefits. You may get tax deductions for payments you make towards your equipment lease or loan.
Equipment and vehicle upgrades. If you lease equipment instead of buying it outright, you can stay up to date on the latest technology and upgrades.
No ownership responsibility. At the end of the lease, you can return your equipment and don’t need to worry about selling or upgrading it.
Lower payments. You’ll usually pay less each month for a lease than you will for a loan.
Credit building. Equipment financing can help build your business’s credit history and improve its credit score, making it easier to secure future financing.
Invoice factoring, merchant cash advances, EFT bank only advances
Features of invoice factoring and financing
Purpose. Sell your outstanding invoices for a discounted price (invoice factoring) or borrow against them to generate cash flow for your business (invoice financing).
Flexible loans. Can be used as a one-time solution or as a recurring financing method, depending on your business’s needs.
High amounts (but high fees). Borrow up to 75% – 90% of the value of your outstanding invoices (but pay a fee worth 10% – 25% of your invoices’ value).
Doesn’t affect your credit score. The loan will be paid back as your clients pay their outstanding invoices.
Credit risk protection. The factoring company assumes the credit risk of the invoice, reducing the risk for your business.
No need for collateral. This type of financing is secured by your invoices, and any money that comes in to repay your invoices will go to the lender.
No impact on your personal credit. Invoice financing doesn’t affect your personal credit score.
Revenue-based financing, merchant cash advances, invoice payments with flat fee for e-commerce companies
Features of revenue-based financing in Canada
Purpose. Borrow money that you repay with a percentage of your ongoing gross revenue.
Repayment tied to business earnings. Your repayment amounts will be tied to a percentage of your revenue (usually 1% to 3%, but it could be as high as 8%).
No fixed term. You won’t repay your loan on a set term, instead your repayments will be based on your revenue, which can fluctuate over time.
Factoring rate instead of interest. You’ll usually need to repay your loan based on a factoring rate (for example, 1.5X the amount of your original loan).
No need for collateral. This type of financing is secured by your future sales, so there’s no need to put up any other type of collateral.
Flexible repayment. Revenue-based financing gives your business the flexibility to repay only what you can afford based on a small percentage of your revenue.
Best for businesses with predictable revenue. This type of financing is best for businesses with predictable revenue, such as SaaS or e-commerce businesses.
Merchant cash advances, invoice factoring, EFT bank only advance
Clearco
Merchant cash advances, invoice payments with a flat fee for e-commerce companies, revenue-based financing
Features of business/merchant cash advances
Purpose. Similar to revenue-based financing, merchant cash advances let you borrow money that you repay with a percentage of your daily credit/debit card sales.
No fixed term. You won’t repay your loan on a set term, instead your repayments will fluctuate based on how much your business earns.
Factoring rate instead of interest. You’ll usually need to repay your loan based on a factoring rate (for example, 1.2X to 1.5X the amount of your original loan).
No need for collateral. This type of financing is secured by your daily sales, so there’s no need to provide collateral on top of your daily repayments.
Easy to qualify. As long as your business already makes decent revenue, it should be relatively easy to qualify for financing through a merchant cash advance.
Best for service-based businesses. This type of financing is ideal for service-based businesses that make high card sales (for example, retail stores and restaurants).
How to compare features of small business loans in Canada
There are a number of factors you should consider when applying for a business loan:
Loan amounts. Some lenders offer relatively small loans, while others will give you up to $5 million if you qualify. Check a lender’s minimum and maximum loan amounts before you borrow to make sure the loan will meet your needs.
Interest rates. Rates vary by lender depending on factors like your credit score, business size and annual revenue. Banks generally offer the most competitive rates, and their current prime rate is 4.95%. Learn more about business loan interest rates.
Loan terms. Loan terms can range from six months to 25 years, depending how much you borrow and the collateral you use. You’ll want to look for a term that gives you manageable repayments without charging you too much interest.
Fees. Many small business loans come with hidden fees that can drive up the cost of your loan. Check for origination or setup fees, early repayment penalties or late/missed payment fees.
Repayment options. Some lenders let you repay your balance in regular installments, while others take a portion of your monthly sales. Pick the option that makes the most sense for your financial situation.
What are the interest rates for a small business loan in Canada?
Your interest rate will depend on a variety of factors, such as your credit score, loan type, amount and term. Bank prime rate is currently 4.95%.
To qualify for lower interest rates, you’ll need to have the following:
Good or excellent personal/business credit score
Stable, positive cash flow (as opposed to seasonal, cyclical or negative cash flow)
Excess net income that can comfortably cover your loan payments
In business for at least two years
Able to provide collateral
The candidates that meet these criteria have the highest probability of repaying the loan, which is why they receive the best rates.
Small business loan calculator: Calculate your monthly payments
Business loan calculator
Use this business loan calculator to find out how much your monthly payments could cost.
What do lenders look for when offering business loans?
You’ll need to provide the following information when applying for business loans in Canada:
Business age. You have the highest chance of approval with the bank if you’ve been in business for at least two years. Some online lenders will let you qualify with six months or more in business, but you may need to look for specialized funding if you’re a startup.
Minimum credit score. You’ll typically need a minimum credit score of 660 to qualify for a business loan at favourable rates. You can get a loan with a lower score if you’re willing to accept higher rates or put up an asset like your home or vehicle as collateral.
Monthly or annual revenue. Your business revenue will be a key factor that lenders will use to assess how much you can borrow. The higher your revenue, the more likely you are to be approved for higher loan amounts.
Collateral. You can use assets like company equipment, vehicles and property as collateral to secure your loan. This will get you lower interest rates, but you risk losing your assets if you default on your loan.
Commitment. Lenders will look at how much cash you’ve put into your own business before they fund a loan. They may also want to see a professional business plan and revenue projections to better understand the long-term sustainability of your business.
How to apply for a small business loan in Canada
Here’s what you can expect when you apply for a small business loan in Canada.
Know what your business needs. If you need a lump sum of cash, aim for a business loan. For working capital, try a line of credit or a merchant cash advance. For new equipment or a fleet of vehicles, look into equipment financing. Determine the purpose of the funds to help you narrow down your choices.
Get prequalified. Choose a few lenders that look good, and try to prequalify for funding. Fill out an application to pre-qualify online or set up a call with your chosen lenders to learn more about their options and get a feel for their customer service. Once you find the best offer or the best overall fit for your business, submit a formal application.
Go through a formal application process. Once you’re pre-approved and accept an offer, you’ll usually be assigned an account manager. They can help you submit information about yourself and your business, along with any required documents. In some cases, you may also need to go through a business loan interview or allow your lender to conduct a site visit.
Review and sign your documents. Make sure you understand the terms and conditions of your business loan before you sign. If you don’t understand a clause or term, ask your lender—or better yet, a lawyer. That way, you won’t be hit with any surprises down the road.
What documents do I need to qualify?
You’ll need the following documents to apply for a small business loan in Canada.
Government-issued ID. Driver’s licence or passport to show that you meet age and residency requirements.
Business bank statements. Recent business bank statements to show cash flow.
Tax returns. Business tax returns to show your annual revenue. You may also need to provide personal tax returns if you personally guaranteed your loan.
Business plan. More common with banks and credit unions, some online lenders also ask for a business plan or at least financial projections.
Profit and loss statement. Also called an income statement, your P&L statement breaks down your company’s net revenue and helps your lender verify how much debt your business can afford to take on.
How long does it take to qualify for a small business loan?
It can take a few days to a few weeks, depending on your lender. Banks and credit unions will usually take longer, while online lenders tend to have the fastest turnaround times. The best way to speed up your application is to fill it out correctly and have all of your documentation ready to submit when you apply.
Small business loans in Canada for bad credit
Not all lenders will lend to you if you have bad credit, but there are still plenty of small business loans in Canada for bad credit. Banks usually require good to excellent credit scores, while credit unions and online lenders will typically be more lenient. These lenders will usually look at other factors like your monthly revenue to determine your loan.
You can usually improve your chances of getting a business loan with bad credit if you secure your loan with your business or personal assets (like your home, storefront or a fleet of vehicles). Just be aware that your lender will be able to claim these assets if you fail to pay back the loan.
Bottom line
There are many types of financing available to help you with your business. You can (1) borrow a lump sum of money with a business loan, (2) lease or buy assets with equipment/vehicle financing or (3) cover your daily expenses with a line of credit or other forms of financing that you repay based on your revenue. Once you decide what type of financing you need, compare lenders to find the best deal.
Frequently asked questions
It depends on the type of financing you're looking for. Bank loans can be more difficult to qualify for, especially if you have poor credit or a less-established business. Online lenders and credit unions tend to have less strict eligibility requirements.
That depends on your lender. Online lenders typically provide a decision in a matter of hours or days. Banks may need a few weeks to go through your application details and supporting documents. An easy way to find out how long it will take to process your business loan in Canada is to ask your lender directly.
Business loan refinancing comes in different shapes and sizes. Your options include extending the terms of your current loan, applying for a brand new loan to pay off existing debts or choosing a different loan product altogether, such as a business line of credit.
Not necessarily, but it can help build a case for your business. You can use it to complement your personal credit score, which most lenders will also review when determining your eligibility. Many lenders will want you to sign a personal guarantee that you'll repay your loan, which is based on your personal score, and your personal score will go down if you default.
Definitely! If you don't have assets to put up or you would rather not use them as collateral to secure your loan, you can apply for unsecured business loans in Canada. This type of loan uses your credit score to determine if you qualify. The downside is that you'll usually pay higher interest rates than with secured loans, and your credit score will go down if you default.
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To make sure you get accurate and helpful information, this guide has been edited by Stacie Hurst as part of our fact-checking process.
Claire Horwood was a writer at Finder, specializing in credit cards, loans and other financial products. She has a Bachelor of Arts in Gender Studies from the University of Victoria, and an Associate’s Degree in Science from Camosun College. Much of Claire’s coursework has focused on writing and statistics, with a healthy dose of social and cultural analysis mixed in for good measure. In her spare time, Claire enjoys rock climbing, travelling and drinking inordinate amounts of coffee. See full bio
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