Emergency business loans in Canada

Emergency business loans let you borrow money quickly to deal with emergency expenses. You can usually access an emergency business loan within a few days of applying, and you won’t need to secure funds with collateral in most cases.

What are emergency business loans?

Emergency business loans in Canada are designed to let you access funds quickly without the need for collateral. They can be used to help businesses deal with expenses related to repairs, COVID-19 and many other emergencies.

These loans can be used for all types of expenses, such as helping you hire and retain employees, pay your business rent and maintain your regular operations. They can also help you pay for business losses related to damage or unexpected closures.

Where can you get an emergency business loan?

You can qualify for emergency business loans with banks, credit unions, private lenders and even the government. Find out more about each loan type below:

Bank loans

• How it works.Bank business loans often come with mid-level interest rates and are safe to borrow, but watch out for strict eligibility requirements.
• Loan types. You can get secured or unsecured loans as well as lines of credit and government loans.
• Does my business qualify? You’ll typically need to be a Canadian resident, have a good credit score and earn a high annual revenue to qualify.
• Where to apply. Examples of where to apply include BMO, TD Bank, RBC, CIBC, Scotiabank, BDC, HSBC, Canadian Western Bank and National Bank.
• How to apply. Submit your application online or visit the bank in person to discuss loan options, supply the required documents to show you meet the eligibility criteria and wait for a loan decision.

Credit unions

• How it works.Credit union business loans are often smaller and more flexible than big bank loans, but you may need to be a credit union member to qualify.
• Loan types. You can get secured or unsecured loans as well as lines of credit and government loans.
• Does my business qualify? You’ll typically need to be a Canadian resident, have a fair to good credit score and earn a high annual revenue to qualify.
• Where to apply. Examples of where to apply include Meridian, Servus, Vancity, Connect First, Conexus, First West, Steinbach, Alterna Savings and Coast Capital Savings.
• How to apply. Submit your application online or visit your credit union in person to discuss loan options, supply the required documents to show you meet the eligibility criteria and wait for a loan decision.

Private lenders

• How it works. Online loans are usually easier to qualify for and may come with lower interest rates than banks (depending on your lender), but they also come with a higher risk of borrowing from a predatory or untrustworthy source.
• Loan types. You can get secured or unsecured loans as well as lines of credit and government loans.
• Does my business qualify? You’ll typically need to be a Canadian resident, own a business in Canada and earn a decent annual revenue to qualify.
• Where to apply. Examples of where to apply include Loans Canada, Swoop, SharpShooter, OnDeck, Company Capital, Thinking Capital and Lending Loop.
• How to apply. Visit the provider’s website, input your personal/business information and required documents, click submit and wait for a loan decision. Compare private lenders.

Government funding

• How it works. These loans are backed by the federal or provincial government and usually come with low interest rates, flexible terms and less strict eligibility criteria.
• Loan types. You can get secured and unsecured loans as well as lines of credit and low interest financing.
• Does my business qualify? You’ll typically need to be a Canadian resident, have a decent credit score and earn a decent annual revenue to qualify.
• Where to apply. Apply for this type of financing with most banks and credit unions through special government-backed programs. You can check out Canada’s economic response plan for emergency financing related to COVID-19.
• How to apply. Visit the bank in person or apply through its website, provide personal/business information and supporting documents, submit your application and wait for a loan decision.

What can I use emergency business loans in Canada for?

You can use emergency business loans to pay for any business-related expenses you may have due to an unprecedented emergency. For example, you might use your loan to supplement your cash flow, pay your employees, replace inventory or repair damaged equipment in the event of a natural disaster. You’ll just need to be able to prove that any expenses you use your loan for are related to your business.

Emergency business loan costs

Emergency business loans in Canada come with an annual APR that shows you the total percentage you’ll pay in interest and fees combined.

• Interest rates. Interest rates for unsecured business loans range from 5% to 36% on average, but you’ll pay more with bad credit. You may be able to get lower interest rates with government loans.
• Fees. Emergency business loans can include a variety of fees that will increase your repayments. These fees are summarized in the table below and can add hundreds of dollars to your total loan amount.

How to compare emergency business loans in Canada

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

• Loan amount. Search for a lender that will give you the amount you need to pay for your emergency expenses.
• Interest rates. Compare lenders to find the one with the lowest interest rates. Try to keep your rates under 10% to keep your repayments manageable.
• Loan terms. Choose a short term loan (1-3 years) if you want to pay less interest overall or get a longer term loan (4-7 years) if you want lower monthly payments.
• Fees. Keep an eye out for hidden fees, including origination or early repayment fees.
• Repayment options. Negotiate the repayment terms that work best for you. Find out what options are available if you end up struggling to repay your loan.
• Cash availability. Ask 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.

How to apply for emergency business loans in Canada

You can apply for emergency business loans by following the steps below:

Application process

1. Compare lenders. Compare at least 3-4 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 the bank in person to apply for an emergency business loan.
3. Fill out an application. Provide contact information and details about your business such as years in operation, annual revenue and business assets/debt.
4. Supply financial information. Input information about the bank where you want the money transferred (such as bank name, transit number and account number).
5. Agree to a credit check. Give your lender permission to check your personal or business credit score.
6. Provide supporting documents. Submit required documents to verify your ID, revenue and other information about your business.
7. Submit your application package. Submit your application and wait for approval.

Loan eligibility requirements

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

• Be at least 18 years old or the age of majority in your province or territory.
• Be a Canadian citizen or a permanent resident with a valid Canadian address and a working bank account.
• Have a decent credit rating (usually 650 or more) or be willing to accept much higher interest rates to get emergency business loans with bad credit.
• Supply a registered business number and be able to prove that you’ve been in operation for at least 6 months (check out start-up loans if you don’t meet these criteria).
• 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 emergency business loans.

Can I get emergency business loans with bad credit?

You may be able to qualify for business loans with bad credit if your company has a high annual revenue or you can secure your loan against your business assets. Your lender will typically consider factors such as how established your business is, what type of loan you want and whether you have any other business debts. Just prepare yourself to pay much higher interest rates if you apply with bad credit.

Bottom line

Emergency business loans can help you access funds quickly to deal with unexpected or emergency expenses. You can usually access an emergency business loan within a few days of applying, and you won’t need to secure funds with collateral in most cases. Find out more about emergency business loans in Canada, compare lenders and learn how to apply today.

Frequently asked questions

• How much can I borrow with emergency business loans in Canada?

  Many emergency business loans can range anywhere from $10,000 to $300,000, but you may be able to borrow more or less depending on factors such as your lender, credit score and/or business revenue. The best way to find out how much you can borrow with a business loan in Canada is to get pre-approved by multiple lenders.

• What is the most important factor to consider when choosing a business loan?

  That will depend on the priorities of your business. You’ll want to focus on interest rates and fees to save money for your business. You may want to consider repayment flexibility and length of loan term if you’re worried you’ll struggle to make your repayments. Think about what’s most important for your business and choose your lender accordingly.

• Can I secure my emergency business loan with assets to lower my rates?

  You may be able to get a secured emergency business loan if you have a valuable asset to secure your loan against. Just be aware that it could take more time and paperwork to establish a secured loan, which may not be ideal if you need money for your business as quickly as possible.

• Why was my 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 revenue. It could also be as simple as an incomplete application, so make sure to contact your lender for more information.