What is an unsecured business loan?

An unsecured business loan is a loan that is not backed by any collateral. This means you won't be putting any of your assets at risk if you default on your loan, but it also means you'll need to accept a higher interest rate than a secured loan.

How much can I borrow with unsecured business loans in Canada?

It depends on the lender. The best way to find out how much you borrow with a business loan in Canada is to get pre-approved by multiple lenders. This will also give you a better idea of how much interest you'll need to pay.

Do I need to have a business credit score to apply for an unsecured business loan?

While it can help to have a well-established business credit score, you may be able to get by with just your personal score. Just be aware that you could be required to sign a personal guarantee for your business loan if you use your personal credit score to qualify. This will make you personally obligated to repay your loan if you default on payments.

Is a small business loan secured or unsecured?

Small business loans can be secured or unsecured. A secured loan lets you put up collateral such as personal or business assets to back your loan. This reduces the risk for the lender and allows you to access a better rate. Meanwhile, unsecured small business loans don't require you to put any of your assets at risk, so the amount you can borrow and the interest rate you get are determined based on your creditworthiness.

Why was my business loan application rejected?

Your application may be rejected because you don't meet the eligibility criteria. For example, you could be denied if you fail to meet age or residency requirements or if you have a low credit score and/or don't make enough income. It could also be as simple as an incomplete application, so make sure to contact your lender for more information.

Can I get unsecured business loans for startups?

You may have more trouble getting an unsecured business loan to fund a start-up or new company. This is because many lenders will want to see that you have an established business with a regular stream of revenue before they'll provide you with financing. Check out your options for funding a new venture in our guide to start-up loans .

What happens if I default on my loan?

You'll typically be charged a fee if you miss any loan payments. If you default on an unsecured business loan, what happens next depends on the lender and the terms of your loan. If you provided a personal guarantee, the lender can repossess your personal assets and sell them to cover your debt. If not, the lender or a debt collector may sue you to collect the outstanding loan balance. Your business and personal credit scores will also be negatively affected, which will make it more difficult to get approved for business or personal loans in the future. Find out more in our guide to what happens if you default on a business loan.