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Guide to loans for businesses in decline

What financing options do you have if your business is heading into the red?

It’s almost impossible to maintain consistent periods of high growth. Many businesses experience lulls in revenue or cash flow fluctuations, but if your numbers are starting to go the wrong way your business may be declining. Stimulating growth should be your number one priority, and applying for finance may allow you to do this. Find out what financing options you have in this guide.

When is a business in decline?

While every business may experience downturns, a business in decline is one that is experiencing consistent decreasing revenue and customers. This decline will not be consistent with the cash flow fluctuations of a business and will require intervention from businesses to encourage growth.

Not the stage your business is at? Explore other options:


High-growth businesses

Established businesses

Stagnant businesses

Funding needs that are common for businesses in decline

Declining businesses have varied funding needs, which can include the following:

  • Innovate the business product or service. Declining businesses tend to see a sharp drop in take-up of their product/s or service. By innovating the source of profit, whether it be by developing a new product, diversifying the offering or changing the existing service, it can instill growth back into the business.
  • Cash flow assistance. If revenue is lower, the business’s cash flow is likely to be under pressure. Declining businesses may be looking for assistance with cash flow issues, whether they be for the long or short term.
  • Human resources. Businesses that are declining may have issues with human resources, which can include needing to reduce employee numbers, consolidate teams or hire additional help in key growth areas.
  • External advice/support. It can be a good idea to seek external advice or support if internal strategies are failing. However, experts cost money. If you don’t want to put further strain on your cash flow you may consider finance to assist you with this.

Compare business loan options

Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
Prime pricing from 9.00%
$500 - $250,000
6 - 120 months
$10,000 /month
100 days
Unsecured Term, Merchant Cash Advance, Invoice Factoring
To be eligible, you must have been in business for at least 100 days with a minimum of $10,000 in monthly deposits.

SharpShooter provides capital to small businesses that are underserved by banks and credit unions. It measures overall business health and potential rather than focusing strictly on traditional metrics. Fill out a simple application and get pre-approved in minutes. Receive your funds within 24 hours.
Swoop Funding Business Loan
4.00% - 25.00%
$1,000 - $5,000,000
3 - 60 months
$10,000 /month
24 months
Term, MCA, LOC & more
To be eligible, you must have been in business for at least 24 months and have a minimum of $100,000 in annual revenue.

Swoop partners with banks and alternative lenders to match your business with the right funding options. Register for free and browse your offers without affecting your credit score.
Lending Loop Business Loan
Starting at 4.96%
$10,000 - $500,000
3 - 60 months
$8,500 /month
12 months
To be eligible, you must have been in business for at least 12 months and have a minimum of $100,000 in annual revenue.

Lending Loop is Canada’s first regulated peer-to-peer lending platform. Complete an application in 5 minutes. Once you accept your loan offer, investors will begin to fund your loan on the marketplace. Your loan will be transferred to your bank account when it is fully funded.
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$10,000 /month
6 months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum monthly revenue of $10,000.

OnDeck 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.
Loans Canada Business Loan
Prime Pricing from 9.00%
$2,000 - $350,000
3 - 60 months
$4,166 /month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $350,000. Complete one simple online application and get matched with your loan options.

Compare up to 4 providers

Types of financing

There are three main types of finance: debt finance, equity finance and internal funds. As internal funds tend to be limited in declining businesses and equity finance will be extremely difficult to access, the following types of debt finance can be considered:

Loan typeLoan amountFeatures
Line of credit$10,000–$1,000,000
  • Only use as much as you need
  • Pay interest on your balance, not your credit limit
  • Generous loan terms (usually up to 25 years)
Term loan$1,000–$500,000
  • Receive a lump sum and pay it off over a set term
  • Regular repayments can help you to budget
Business overdrafthundreds–$10,000
  • Pay interest on your balance, not your overdraft limit
  • Attached to your business bank account
Invoice financing80% or more of the invoice amount
  • Assist with cash flow
  • No need to wait for invoice payment
Credit cards$500–varies
  • Pay the minimum balance or pay it off in full if you can
  • High credit limits are available

How you can compare business loans

Not sure what type of business loan is right for you? By comparing business loans you can select the type of finance that best suits your needs.

  • Loan amount. Business lenders generally have a minimum and maximum amount that you can borrow, so make sure the loan you need falls within that range. Keep in mind that your business may not be eligible for the loan amount you apply for.
  • Flexibility. Can you borrow more over the course of the loan term if you need to? Can you pay back the funds earlier if you’re able to? Do the repayments fit in with your business’s cash flow and budget?
  • Repayment affordability. How much will your repayments be and can your business afford it? If your business will struggle to manage the repayments then consider borrowing a lower amount or extending the loan terms.
  • Turnaround time. Some non-traditional business lenders can have your funds to you within 24–48 hours, but other lenders may take longer. Make sure you can receive the funds when you need them.
  • Cost of the loan. Loan costs vary and are explained in more detail below, but make sure the interest rates and fees are competitive when compared to similar loan offerings.

The costs to consider

It’s more than just the interest rate you need to consider. Here are some of the costs to expect with a business loan:

  • Interest rate. Check whether the rate is fixed or variable and what type it is. For example, is it a factor rate? You should also check the comparison rate to get a better idea of the overall cost of the loan.
  • Upfront fees. These may be called application or loan origination fees, but work in essentially the same way. The fee will be added to your repayment amount once you’ve been approved for the loan.
  • Ongoing fees. Check if any weekly, monthly or annual fees are charged with the loan. You may also have to pay a direct debit fee or something similar that will increase the cost of your loan.
  • Default expenses. If your repayment is late, payment is missed or you default on the loan you will be charged various fees relating to enforcement. Get in contact with your lender if you think you’ll have trouble repaying the loan.

How much does a business loan cost?

Questions to ask before you apply

Can my business afford the loan?

This is the most important question to ask and one you need to determine before applying for a loan. Make sure you calculate the exact cost of repayments to see if the amount fits within your budget.

Also figure out the long-term cost of your loan – how much you’ll be paying in interest and fees by the end of the term. A loan with a shorter term will come with higher payments but may cost less overall than the same loan spread out over a longer period of time.

Is the loan affordability based on current profits or projected ones?

A business in decline has to be careful with profit projections, especially when it comes to being able to afford a loan. If you’re relying on projected profit uplifts you may want to consider a more flexible loan that allows you to repay the minimum amount on the balance, such as a business credit card or line of credit.

Have I organized my application?

Some newer lenders may base their decision on your business’s revenue and other similar financial data. However, if you’re applying with a bank, you will need business plans and cash flow projections. Make sure you’ve checked what you need before you start the application, and ensure your business is in the best position to be approved.

What am I using the funds for?

Have a plan for every dollar of the loan amount should you be approved. This will not only help you with projections for your business but may also help you get approved.

How to determine your business financing needs and pick the best option

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