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Business loans for high-risk industries

Find out where and how to get financing if lenders think your industry is too risky.

While these lenders may not approve loans for businesses across all high-risk industries, they do work with some high-risk industries (such as the cannabis sector). You should contact the lender in advance of applying to see if they approve loans for the high-risk industry your business operates in.
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Name Product APR Range Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered Broker Compliance
Journey Capital Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
6+ months
Term Loan, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum annual gross revenue of $100,000.

Journey Capital 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.
Merchant Growth Business Loan
12.99% - 39.99%
$5,000 - $800,000
6 - 24 months
$10,000 /month
6 months
Unsecured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months and have a minimum of $10,000 in monthly sales.

Merchant Growth offers financing tailored to business needs. It specializes in providing capital based on future cash flows, but it also offers fixed solutions. Fill out an application within 5 minutes and get your funds within 24 hours.
Loans Canada Business Loan
6.60% - 29.00%
$4,000 - $500,000
3 - 60 months
over $10,000/month
100 days
Unsecured Term
Loans Canada is a loan search platform with access to multiple lenders. Applicants will be matched with a suitable lender based on credit history and borrowing requirements.
To be eligible, you must have been in business for at least 100 days, have a Canadian business bank account and show a minimum of $10,000 in monthly deposits ($120,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $500,000. Complete one simple online application and get matched with your loan options.
Even if you’ve been in business for a few years, have excellent credit and are turning a big profit, your business still might struggle to qualify for a loan if it’s in a high-risk industry. Traditional lenders like banks don’t want to take the chance that your business might fold before you can pay back your loan – plus some banks are unwilling to lend to certain businesses like ones in the cannabis industry. If your bank won’t approve you for a loan, you could turn to online lenders – many are willing to work with high-risk industries.

What do lenders consider a high-risk industry?

Lenders generally consider industries high-risk if they are more likely to fail. Risk is relative: for example, industries like alcohol and gambling might be considered high-risk because they’re subject to regulations that frequently change, while other industries like restaurant and retail might be seen as risky because revenue isn’t always guaranteed. Industries that are less profitable because of changes in technology, like the printing industry, are often considered high risk too, as well as industries that are new, progressive or operate close to legal grey areas like the cannabis industry.

Some common industries that are considered high-risk include:

  • Insurance
  • Legal services
  • Lending
  • Manufacturing
  • Mining
  • Newspaper
  • Oil and gas
  • Pawning
  • Real estate

    What types of business financing can high-risk industries qualify for?

    You might not be able to get a business loan from the bank if you’re in a high-risk industry – but you aren’t totally without options, as many online lenders are willing to work with high-risk industries. In fact, you might even be able to qualify for favourable rates if your business can back the loan with collateral, business assets or a personal guarantee. Otherwise, be prepared to pay.

    Best for businesses that rely on invoices: Invoice factoring

    Invoice factoring technically isn’t a loan but an advance on your business’s unpaid invoices. How does it work? You sell your business’s unpaid invoices at a discount to a factoring company, which pays a percentage of their value in advance. The factoring company then collects payments from your clients and gives your business the rest of the money, minus a fee.

    Factoring is one of the easiest types of financing to qualify for, but it can be expensive. Your business might also be required to sign up for several months or years of factoring, which can make it difficult to qualify for other less-expensive types of financing in the future.

    Best for businesses that rely on credit card sales: Merchant cash advances

    A merchant cash advance (MCA) is similar to factoring, but for customer-facing businesses like retailers or restaurants. It works by giving your business an advance on future sales, which you repay plus a fixed fee with a percentage of your daily bank deposits or credit card transactions.

    Like factoring, an MCA is easy to qualify for, but also one of the most expensive types of business financing out there. It can make it hard for your business to grow and is best left for emergency situations.

    Best for emergency expenses: Short-term loans

    Don’t qualify for invoice factoring or a merchant cash advance? Some lenders offer short-term loans that work a lot like a traditional term loan with smaller borrowing amounts, higher rates and shorter terms to pay back the loan.

    Short-term loans typically come with daily or weekly repayments and, like merchant cash advances and invoice factoring, are expensive. But you usually don’t need collateral or good credit to qualify, and the turnaround time can be as fast as one day.

    Best for purchasing a specific item: Vehicle and equipment loans

    Vehicle and equipment loans tend to have a higher rate of approval since these loans are secured by the item you’re purchasing. This makes them a viable option for businesses that might not qualify for an unsecured loan and don’t have enough assets to use as collateral.

    Still, some lenders might have some industry restrictions, so check before you apply. You’ll likely have to make a down payment of at least 10%, and you run the risk of losing the item you bought if your business can’t pay back the loan.

    Best for financing large projects: Canada Small Business Financing Program (CSBFP) Loan

    The CSBFP offers government-backed loans in amounts up to $1,000,000. 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. The decision for approval ultimately lies with your financial provider.

    To be eligible for a CSBFP loan, you’ll need to earn less than $10 million annually in revenue, be a for-profit business and use the funds for a specific purpose, among other requirements. What you can use your loan for includes: the purchase or improvement of land or buildings, the purchase or improvement of new or used equipment and the purchase of new or existing leasehold improvements.

    What other factors can make a business seem risky?

    Your business’s industry isn’t the only thing that can make it difficult to get a loan. Lenders often consider these other factors when looking at your application:

    • Time in business. The less time your business has been around, the more of a risk you pose to potential lenders. In fact, many lenders require businesses to be up and running for at least a year or two before they’re eligible for financing. Newer businesses might have more luck with online lenders, whereas startups should consider alternatives like startup loans or crowdfunding.
    • Revenue. How much your business makes each month or year is also important when applying for a loan. Lenders like to see that your business consistently brings in enough money to afford loan repayments. Many won’t work with small businesses that make less than $5,000 a month or $100,000 a year.
    • Business debts. Lenders often don’t want to work with businesses that are already juggling several different types of debt repayments, since you might not be able to afford to take on more. If repaying your current debt load doesn’t leave much wiggle room, consider paying off those loans first before taking out another.
    • Cash flow. If your business spends more than it makes or has seasonal sales, you might struggle to qualify for a business loan. Lenders often prefer to work with businesses that are predictable and have a consistent cash flow. Some also require businesses to be cashflow positive to be eligible for financing.
    • Personal credit score. Your business credit score typically doesn’t hold as much weight as your personal credit score for two reasons: business credit scores aren’t as widely used as personal credit ratings and many business lenders require a personal guarantee from business owners. This means you’re on the hook for paying back the loan if your business fails. If you don’t have good credit, your personal guarantee might not mean as much.

    4 tips to qualify for a business loan in a high-risk industry

    Looking to increase your odds of getting approved for financing? Follow these tips:

    1. Have a business plan. Your business plan is where you get to make a case for yourself and your business. Having a detailed, professional strategy outlined could help put your lender at ease and increase your chances of getting approved.
    2. Ask questions. Not all lenders advertise which industries they’re willing to work with. To avoid applying for a loan you were never going to get, reach out to the customer service team to make sure your business is eligible first.
    3. Pay off other debts first. Having less debt on your business’s plate can free up money to take on another loan and make your business more attractive to a lender.
    4. Offer collateral. Backing your loan with collateral makes it a lot less risky for the lender — though you could lose these assets if your business can’t pay back the loan.

    Bottom line

    While your loan options are much more limited as a business in a high-risk industry, it’s not impossible to get financing. If your financial provider won’t work with you, backing your loan with collateral and working with online lenders can help you get the funding your business needs. Before applying for a loan, contact the lender to ask if they offer and approve loans for the type of industry your business operates in.

    Curious about other types of business financing? Read our guide to business loans to learn how it all works and compare lenders.

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