While a $500,000 business loan in Canada isn’t easy to get approved for, there are some banks and online lenders that offer this kind of money. But you’ll need to at least meet minimum annual revenue and time in business requirements in order to be eligible.
Compare business loans
1 - 2 of 2
How to get a $500k business loan in 5 steps
Major banks may offer loans of up to $500,000 for qualifying businesses, but you can also turn to private business loan providers or 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 $500,000 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.
Where can I get a 500k business loan in Canada?
Many Canadian financial institutions such as banks, credit unions and online lenders offer $500,000 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.
Canada Small Business Financing Program (CSBFP)
You can apply for these loans through a chartered bank, credit union or a caisse populaire. They are at least 75% backed by the Government of Canada. Your business must make under $10 million in revenue annually to be eligible for this program. You can access up to $1,000,000 in funding, but you’ll need to be a for-profit business, use the CSBFP loan funds for specific approved purposes, earn less than $10 million in revenue annually and operate a business in Canada.
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.
Online lenders
You might be able to find a $500,000 business loan from an online lender – but many don’t offer this amount. If you do find such a lender, you’ll likely need an annual revenue of at least $100,000, a good to excellent credit score and your business needs to have been operating for several years.
Crowdfunding
The perk of crowdfunding is that it’s not a loan so you don’t have to pay back any of the money you receive. Instead, you pitch your new product or idea on an online crowdfunding platform where people choose to give you money, often in exchange for rewards or equity in your business. While there are several types of crowdfunding, using equity-based crowdfunding would give you the best chance to raise $500,000 for your business.
How to qualify for a $500,000 business loan
To qualify for a business loan of this size, you and your business must typically meet criteria that includes:
Time in business. Most lenders require that you’ve been in business for at least a year.
Annual revenue. Your business will likely need to bring in at least $100,000 annually in revenue.
Personal credit. Lenders tend to rely on personal credit scores rather than business credit scores. You’ll likely need a good credit score of 650 or higher to qualify. It’s also common for business lenders to ask for a personal guarantee from the owner.
What credit score do I need for a $500k business loan?
Typically, you need a personal credit score of around 650 or higher to qualify for $500,000 in business financing. Generally, the higher your score, the more competitive the options you’ll have to choose from.
Even lenders with low overall credit score requirements might require higher scores for large loans. For example, to qualify in general for a Lending Loop Business Loan, you’ll need a minimum credit score of 600. But you’ll have a better chance of approval and get access to more favourable loan terms for its maximum $500,000 financing amount with an excellent credit score of around 760 or higher.
Unsecured $500k business loans
Most $500,000 business loans require some kind of collateral — especially if it’s an equipment loan or for commercial real estate. However, it is possible to get an unsecured business loan of $500,000 from select online lenders.
Typically, you’ll need a higher credit score and stronger business financials to qualify for an unsecured business loan. You also might need to prove more business experience, requiring at least two years of experience for approval.
Calculate how much a $500k business loan will cost
How much you’ll repay on a $500,000 business loan depends on two main factors: your loan’s APR and the loan term.
The APR is an expression of your loan’s interest rate and fees as a percentage. The lower the APR, the less you’ll pay in interest over the life of the loan.
The loan term is how long you have to pay back the loan in full. The shorter your loan term, the higher your monthly repayments will be – but a longer loan term means you’ll end up paying more in interest.
Let’s take a look at an example. Say your business takes out a $500,000 loan with an APR of 18% and a two year term. With this loan, your business can expect to pay $24,962.05 monthly for a total of $99,089.22 in interest and fees.
Business loan calculator
See how much your monthly payments could be on a business loan.
What about getting a $500,000 business line of credit?
An alternative to a standard business loan is a business line of credit for $500,000. This may be a better option for people who want ongoing access to financing up to a a set maximum credit limit. You only make repayments, with interest, on the money you borrow. A business line of credit can often be a more flexible type of business financing since it’s open ended.
Business line of credit interest rates typically fall anywhere between 8% and 40%, but it will depend on the lender and your credit history. If you opt to get a $500k business line of credit from a bank, your interest rate will likely be variable based on the Bank of Canada’s prime rate.
Bottom line
When applying for a $500,000 business loan, you’ll need to consider more than whether you meet the eligibility requirements. $500,000 is a lot of money – and you’ll need to be sure that you can afford the monthly repayments and that the loan is going to help your business in the long run.
Frequently asked questions about $500,000 business loans
It depends on your loan and lender. Most $500,000 loans are term loans, which come with fixed monthly repayments over the course of five to seven years. Some business loans come with weekly, bi-weekly, monthly or even daily repayments, though your repayment schedule will likely depend on your financials, as well as the lender you choose.
If you apply for a merchant cash advance, you'll repay it with a percentage of your business's daily sales. With invoice factoring, you won't pay back your factoring company at all — you just won't get your invoice's total value.
You could, but it's rare for a startup or new business to qualify for high-dollar loan amounts. For other options, start with our guide to startup grants.
Yes. Unsecured business loans don't require collateral. But secured loans can come with better rates – although you risk losing your collateral if you default on the loan.
However, you don't necessarily need collateral upfront to qualify for secured business loans. For example, equipment loans and vehicle loans are secured by the equipment or vehicle that your business purchases with the loan.
Business loans in Canada typically range between $5,000 and up to $500,000, although some institutions may offer business financing up to $1,000,000 or more. The amount your business will be able to qualify for will depend on your credit score and how well your business is established, which includes the amount of disposable income available.
Emma Balmforth is a producer at Finder. She is passionate about helping people make financial decisions that will benefit them now and in the future. She has written for a variety of publications including World Nomads, Trek Effect and Uncharted. Emma has a degree in Business and Psychology from the University of Waterloo. She enjoys backpacking, reading and taking long hikes and road trips with her adventurous dog.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Advertiser Disclosure
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
