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Unsecured business loans in Canada

Compare unsecured business loans and find out how to qualify for financing.

1 - 2 of 2
Name Product APR Range Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered Broker Compliance
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.
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Unsecured business loans in Canada let you borrow money without the need to secure your loan with an asset (such as your home, car or business assets). This means you’ll borrow money based on your credit score or business revenue – and you won’t risk losing your assets if you default on your payments. Just be prepared to pay higher interest than you would with a secured loan.

Compare 4 unsecured business loans in Canada

1. Merchant Growth unsecured business loans

$5,000 – $800,000
Loan amount
12.99% – 39.99%
APR
6 - 24 months
Term
Merchant Growth is a Vancouver-based lender that offers alternative financing for small businesses. There's no collateral required to apply for a loan and if you're approved, you'll get the funds you need in as little as 24 hours. Full Review
  • Specializes in alternative small business financing
  • Fast funding
  • Flexible loans to suit bad credit borrowers
  • Designed for small businesses only
  • Eligibility requirements won't suit all businesses
  • High rates for bad credit
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

2. 2M7 merchant cash advance

2M7 Merchant Cash Advance
$10,000 – $250,000
Loan amount
N/A
APR
3 - 6 months
Term
2M7 Financial offers an alternative to business loans in the form of merchant cash advances. It has a 97% approval rating on all submitted applications. Payment is based on future sales, and you don't need to provide collateral to get funding. Full Review
  • Same day funding
  • Easy online application process
  • Repay based on your cash flow
  • No collateral needed
  • Expensive
  • Short-term financing
Loan amount $10,000 – $250,000
APR N/A
Term 3 - 6 months
Interest Rate Type Fixed
Min. Credit Score 550
Fees There is a one-time “factor rate” fee that’s between 1.18 and 1.48 and is multiplied by the amount of your cash advance to determine the total amount that must be paid back. This is the only fee you’re charged for your cash advance.
Turnaround Time A few hours up to two business days, depending on how accurate and complete your application is
Serviced Provinces Canada-wide, excluding Quebec

3. Loans Canada unsecured business loans

$4,000 – $500,000
Loan amount
6.6% – 29%
APR
3 - 60 months
Term
Loans Canada is an online broker that lets you fill out a single application and compare business loans from a network of more than 60 lenders. Same-day approval and next-day funding are available, and there are no fees when you use Loans Canada to compare your options. Full Review
  • Large network of lenders
  • Easy to compare multiple lenders
  • No hard credit check required to apply
  • Apply within minutes
  • Not suitable for home-based businesses
  • Not available for startups
  • Limited customer reviews
Loan amount $4,000 – $500,000
APR 6.6% – 29%
Term 3 - 60 months
Interest Rate Type Fixed
Min. Credit Score 410
Fees Wire / EFT Fee up to $99.95
Turnaround Time 48 Hours
Serviced Provinces All Provinces

4. SharpShooter unsecured business loans

SharpShooter Funding Business Loan
$1,000 – $300,000
Loan amount
5.49% – 22.79%
APR
12 - 60 months
Term
SharpShooter Funding is an online business lender that offers alternative financing options to Canadian small businesses. It's quick and easy to apply online, and SharpShooter Funding will consider your business' financial position rather than your credit score when assessing your application. Approvals are provided within 24 hours, with the funds sent to your account within three business days. Full Review
  • Lenient eligibility criteria compared to banks
  • Easy to apply online
  • Bad credit accepted
  • Get funded within three days
  • High rates if you have bad credit
  • No branches if you'd rather deal with your lender in person
  • Some loans have stricter eligibility criteria than others
Loan amount $1,000 – $300,000
APR 5.49% – 22.79%
Term 12 - 60 months
Interest Rate Type Fixed
Fees $35 NSF fee
$45 incoming wire fee
Turnaround Time 48-72 hours
Serviced Provinces All of Canada

How do unsecured business loans in Canada work?

Unsecured business loans let you borrow money without the need for an asset to secure your monthly repayments. Your credit score is used to determine your eligibility to borrow, so you’ll usually need a good to excellent score (660+) to qualify. You may also be eligible to qualify based on how much business revenue you make.

You can expect the following features with unsecured business loans in Canada:

  • Interest rates. Usually between 7% and 47% for good and bad credit
  • Amount. Typically between $10,000 and $100,000
  • Term. Between 1 and 5 years

Unsecured vs secured business loans

Use this table to compare the main features of secured and unsecured business loans:

FeatureUnsecured loanSecured loan
EligibilityYou’ll need a high credit score and/or business income to qualifyYou’ll require an asset to secure your payments
Interest ratesExpect to pay higher rates due to more risk for the lenderExpect to pay lower rates since payments are secured by your asset
Loan amountBorrow between $10,000 and $100,000 in most casesBorrow more than $100,000 if you have high equity in your assets
TermPay your loan back over 1 to 5 years on averageTake between 3 and 7 years to pay your loan back.

What can I use unsecured business loans in Canada for?

You can use unsecured business loans to pay for any business-related expenses you may have. For example, you might use your loan to supplement your cash flow, lease business real estate or expand your inventory. You’ll just need to be able to prove that any expenses you use your loan for are directly related to your business.

Where can I get unsecured business loans in Canada?

Unsecured business loans are offered by the following providers in Canada:

  • Banks. Bank loans are provided by one of Canada’s Big Five banks, smaller independent chains and multinational banks. Borrowing from a bank means getting competitive rates and dealing with a trusted financial institution, but you’ll need to meet strict eligibility criteria to qualify.
    • Providers include BMO, TD Bank, RBC, CIBC, Scotiabank, Canadian Western Bank and National Bank.
  • Credit unions. Credit union business loans are often more flexible than big bank loans. Just be aware that you’ll likely only be eligible for smaller amounts and you’ll usually be required to be a member if you want to borrow from certain credit unions.
    • Providers include Meridian, Servus, Vancity, Connect First, Conexus, First West, Steinbach, Alterna Savings and Coast Capital Savings.
  • Private lenders. Online loans are usually less expensive and you may be able to qualify with bad credit. The main downside is that you have a higher chance of borrowing from a predatory or untrustworthy lender.
    • Providers include Loans Canada, SharpShooter and Merchant Growth.

Personal guarantees on unsecured business loans

Because you don’t provide any assets as security for your loan, the lender is taking on a higher level of risk. To reduce this risk, the lender may ask you to provide a personal guarantee to qualify for an unsecured business loan.

A personal guarantee is when you promise to repay the loan if your business can’t. The guarantee isn’t tied to any specific personal asset, but you’ll be liable to pay back what you borrow if your business fails.

There are two types of personal guarantees:

  • Unlimited. If you provide an unlimited personal guarantee, you’ll have to cover the total loan cost (plus any legal fees) if your business can’t pay back the loan. It’s an attractive prospect for the lender, but comes with the highest level of risk for you.
  • Limited. A limited personal guarantee features a cap on how much you’ll be responsible to repay if the business can’t. If you’re one of multiple business owners, each owner may be responsible for repaying a fixed percentage of the debt.

Providing a personal guarantee increases your chances of getting approved for an unsecured business loan and helps you access better rates. But it’s also a risk that could place a big strain on your personal finances if your business goes under, so make sure you carefully consider your options before guaranteeing a loan.

Pros and cons of unsecured business loans

Before you apply, consider the benefits and drawbacks of getting unsecured business loans in Canada:

Pros

  • No collateral required. You won’t need to worry about losing your assets if you default on your loan.
  • Faster turnaround. You can get your loan faster because you won’t need to submit as many supporting documents to verify your assets. Same-day funding is available in some cases, but often takes 1-3 business days.
  • Options for bad credit. You may still be able to qualify for unsecured business loans with bad credit (but you’ll usually pay much higher interest rates).

Cons

  • Higher rates and fees. You’ll usually pay higher business loan rates and fees since your lender has to take on more risk to lend you money (without assets to secure your payments). You can also expect lower loan amounts and shorter loan terms.
  • Personal guarantee may be required. You may need to provide a personal guarantee to qualify for a loan, which will place your personal finances at risk if your business can’t repay the loan.
  • Hard to qualify with bad credit. While some lenders are willing to work with borrowers who have bad credit, many aren’t. Bad credit borrowers will also need to accept higher interest rates. Learn more about business loans for bad credit.

How to compare unsecured business loans

Consider these factors before you apply for an unsecured business loan to get the right fit:

  • Loan amount. Look for a lender willing to give you the money you need at a price you can afford. Enlist a cosigner or use collateral to qualify for a higher loan amount.
  • Interest rates. Compare multiple lenders to find the best interest rates. Low rates usually fall under 12% while high rates range from 15% to 40% on average.
  • Loan terms. Choose a term that gives you repayments you can afford. Keep in mind that every year you add will make your regular repayment amount more manageable, but it’ll also drive up the amount of interest you’ll pay overall.
  • Fees. Look at the APR (fees + interest) to determine the total cost of your loan. Keep an eye out for hidden fees, including origination or early repayment fees.
  • Repayment options. Negotiate the repayment schedule that works best for you. Find out what options are available if you end up struggling to repay your loan.
  • Restrictions. Find out if there will be restrictions on how you can spend money. Consider a business credit card or line of credit if you need a steady cash flow.
  • Turnaround time. If you need fast access to funds, check how long it will take for the loan amount to be deposited into your account. Learn more about fast business loans.

How to get an unsecured business loan

You can apply for unsecured business loans in Canada by following the steps below:

Application process

  1. Compare lenders. Compare multiple lenders to find the best fit for your business. Consider getting pre-approved to get a true estimate of the cost.
  2. Apply online or in person. Fill out the application on your lender’s website or visit a branch in person to apply for an unsecured business loan.
  3. Provide personal information. Input information such as your full name, date of birth, address, phone number and email.
  4. Provide business details. Provide details about your business such as your company address, years in operation, annual revenue and business assets/debt.
  5. Supply financial information. Enter your bank account information such as your bank name, transit number and account number.
  6. Agree to a credit check. Give your lender permission to check your credit score as part of the application process.
  7. Provide supporting documents. Upload any required documents with your application to verify your ID, revenue and other information about your business.
  8. Submit your application. Submit your application and wait for approval.

Loan eligibility requirements

To qualify for unsecured business loans in Canada, you may need to meet the following eligibility requirements:

  • Be a Canadian citizen or a permanent resident with a valid Canadian address and a working bank account.
  • Have a good credit rating (usually 660 or more) or be willing to accept much higher interest rates to get unsecured business loans with bad credit.
  • Supply a registered business number and be able to prove that you’ve been in operation for at least six months.
  • Provide a business plan that shows the projected growth of your business, including forecasts for cash flow and income.
  • Show you can repay your loan by providing monthly or annual revenue statements or other requested documents for your business.
  • Sign a personal guarantee to assume personal responsibility for your business loan if you can’t make your repayments for some unsecured business loans.

Can I get unsecured business loans for bad credit?

You may be able to get unsecured business loans with bad credit if your company performs well. Your lender will usually consider factors such as how established your business is, how much revenue you make, how much potential your business has for future growth, and whether you have any other business debts. Just prepare yourself to pay much higher interest rates if you apply with bad credit.

Other types of unsecured business financing

Explore these options if you want a different way to access unsecured cash for your business:

  • Business credit cards. Apply for a business credit card to fund smaller business expenses but expect to pay higher interest rates if you hold an outstanding balance.
  • Business lines of credit. Choose a line of credit if you want funds to be available when you need them, but only pay interest on what you actually borrow.
  • Outside investors. Pitch your business to angel investors, launch a crowdfunding campaign or ask friends or family for a loan to get the capital you need.

Bottom line

You can apply for unsecured business loans in Canada with no need for collateral, but these loans tend to come with higher interest rates than secured loans. You’ll usually need good credit to qualify unless you can prove that your business is well-established and makes a high revenue. Compare lenders and unsecured business loans to find financing that’s right for your business.

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