Business loans for tariff-impacted companies

How and where to get a loan if your business has been impacted by the US–Canada trade war.

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Tim Falk

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Leanne Escobal

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Trump’s tariffs and the Canadian government’s retaliatory measures have had a significant impact on many Canadian businesses. If your business has been affected, you might need extra funding to help cover increased costs, make changes to your operations and help your business navigate through these uncertain times.

And if you’re searching for business loans for companies impacted by tariffs, there are plenty of options to choose from.

Ways to inject financing into your tariff-impacted business

Government assistance

There are several government-backed programs designed to provide financial assistance to Canadian businesses that have been significantly impacted by tariffs. The Large Enterprise Tariff Loan facility has been widely publicized, but other options include the Export Development Canada (EDC) Trade Impact Program and the Ontario Together Trade Fund.

Business Development Bank of Canada (BDC) Pivot to Grow loans

BDC is offering business loans of up to $2 million to help you combat the impact of tariffs on your exports to the USA. At least 25% of your sales will need to be derived from exports to the US, or you will have to demonstrate that your business is significantly likely to be adversely affected by tariffs or the uncertainty they cause. Loan funds can be used to cover operational expenses, offset extra costs, make adjustments to your supply chain and more.

Canada Small Business Financing Program loans

The Canada Small Business Financing Program (CSBFP) offers term loans of up to $1,150,000 and lines of credit of up to $150,000. These financing options are available from banks and credit unions, and they’re backed by a guarantee from the Canadian government. Competitive interest rates apply, so the CSBFP could provide the funds your business needs to navigate tariff turmoil.

Business loans

Alternatively, you could apply for a business loan from a bank, credit union or online lender. You’ll find lower rates from banks and credit unions, but they have stricter eligibility criteria than online lenders.

Business loan interest rates to expect

According to Statistics Canada, the average business loan interest rate in Canada is 5.10%.

Online lenders tend to offer higher rates than major banks, while bad credit business loans also come with higher APRs. The interest rate you’ll get will vary depending on factors such as:

  • Your creditworthiness
  • Your business’ financial position and debt-to-income ratio
  • How much you borrow
  • The loan term
  • Whether you provide collateral to secure the loan

Factors to compare

Consider the following features and factors when comparing tariff business loans and financial assistance options.

Loans vs grants

If you’re searching for government financial assistance, your business may be eligible for a grant that doesn’t need to be repaid. But if you’re taking out a loan, you’ll need to repay the loan amount (the principal) plus interest that accrues on your loan.

Eligibility requirements

Check what criteria you’ll need to meet to qualify for funding. You’ll need to satisfy annual revenue, time in business and credit score requirements. If you’re applying for funding through a specialist program designed to provide financial support for tariff-impacted businesses, you’ll typically need to demonstrate that the tariffs have had a significant effect on your business.

Loan amount

Check how much funding your business is eligible to receive. Is it enough to suit your requirements?

Interest rate

Shop around to find the business loan with the most competitive rate. The rate you get will depend on your business’s credit history, financial situation, debt-to-income ratio, your loan amount and term and whether you provide collateral.

Fees

Read the fine print for details of any loan fees that apply, such as origination and admin fees, missed payment charges and early repayment penalties.

Repayment period and flexibility

How long do you have to repay your loan? Remember, while a longer repayment period will mean a more manageable monthly payment, it’ll also mean you pay more interest in the long run. Make sure the repayment schedule suits your business’s cash flow, and check whether you have the flexibility to repay the loan early without penalty.

What you’ll need to apply

When you’re ready to apply for a business loan, expect to undergo personal and business credit checks. You’ll also need to provide:

  • Your personal information, contact details and proof of ID
  • Details of your time in business
  • Annual revenue figures and details of your business cash flow
  • A business plan with financial projections
  • Information about how you intend to use the loan funds

If you’re applying for a secured loan, prepare details of the asset you’ll be providing as collateral.

And if you’re applying for specific government funding programs or a BDC Pivot to Grow loan, you may be required to demonstrate the impact tariffs have had (or the likely impact they are expected to have) on your business. This may include providing proof of the amount of business revenue that is generated by US exports and supplying financial statements to show the effect tariffs have had on your bottom line.

How to get a business loan if you have bad credit

It’ll be more difficult to get a business loan if you have bad credit, but it’s certainly possible. However, you may need to look beyond traditional lenders like major banks, who generally have quite strict eligibility requirements.

Instead, consider online lenders that offer bad credit business loans along with other types of financing, like merchant cash advances and invoice factoring. To improve your chances of qualifying for funding, you can:

  • Provide a detailed business plan. This will demonstrate the viability of your business, your plans for the future and the projected growth of your business.
  • Demonstrate that you can afford repayments. Provide a repayment plan and details of upcoming contracts to show you will have sufficient income to afford loan repayments. Showing bank statements with a clean payment history and no NSF transactions will also boost your chances of approval.
  • Provide collateral. Providing an asset as security for the loan reduces the risk for the lender and increases your chances of getting a loan.
  • Reduce your credit utilization. Pay down existing debts, such as amounts owing on your business credit cards and lines of credit, to reduce your debt-to-income ratio. This lowers the risk for the lender, making them more likely to approve your loan.

Are there grants or support available to businesses impacted by tariffs?

Yes, there are. If your business has been affected by US tariffs, there are multiple government financial assistance options available.

Large Enterprise Tariff Loan (LETL) facility

Offered by the Canadian Development Investment Corporation, the Large Enterprise Tariff Loan facility provides financing for large Canadian enterprises affected by tariffs. Loans of $60 million or more are available to companies that have $300 million or more in annual Canadian revenue. A company will need to demonstrate that they have sought funding from traditional sources first, plus commit to minimizing job losses and sustaining their Canadian business activities.

Export Development Canada (EDC) Trade Impact Program

EDC’s Trade Impact Program provides $5 billion over two years to support Canadian exporters impacted by tariffs. The program includes trade credit insurance, foreign exchange risk management solutions, working capital guarantees to help businesses access larger loan amounts, and financing solutions.

Farm Credit Canada (FCC) Trade Disruption Customer Support program

This program provides $1 billion in new lending to help Canadian agriculture and food businesses overcome financial challenges and disruptions brought about by tariffs. Lines of credit of up to $500,000 are available along with term loans, while current business customers can defer principal repayments for up to 12 months on existing loans.

CanExport SMEs Program

This program provides small and medium businesses with grants of up to $50,000 to cover 50% of the costs of exporting products or services to new markets. However, the program was not accepting applications at the time of writing.

Provincial government assistance

Depending on where your business operates, financial support may also be available at the provincial level.

For example, the Ontario government has launched the Ontario Together Trade Fund (OTTF), a $50 million funding program to help Ontario businesses serve more customers in other provinces, develop new markets and bring their supply chains back to Ontario. Grants and loans of up to $5 million are available for businesses significantly impacted by US trade disruptions.

Check with your provincial government to find out what support is available where your business is located.

Bottom line

Tariffs and trade wars mean there are uncertain times ahead for Canadian businesses. But assistance is available if you need help setting your business up to survive the disruptions and financial challenges that lay ahead. Compare government grant and loan programs as well as business loans from banks and private lenders to find the funding your business needs to adapt and survive.

Frequently asked questions

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To make sure you get accurate and helpful information, this guide has been edited by Leanne Escobal as part of our fact-checking process.
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Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio

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