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Get a loan to buy a business in Canada

Explore your options for business acquisition loans.

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Get a loan to buy a business

SharpShooter Funding Business Loan logo
  • Borrow up to $250,000
  • Get a loan in 48-72 hours
  • $10,000 /month revenue required
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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%
$1,000 - $500,000
3 - 60 months
$8,500 /month
12 months
P2P
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.
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If you’re seeking a business acquisition loan to buy a business in Canada, you’ll need to prove to your lender that you have a solid plan in place to maintain operations and generate profits. Find out more about how you can use a loan to buy a business in Canada, and learn what you’ll need to qualify.

Can I use a loan to buy a business in Canada?

You can use various types of business acquisition loans to buy a business in Canada.

FinancingLoan amountHow it worksWhere you can get it
Business term loans$5,000 to $500,000Borrow a lump sum of money that you repay over a fixed period of time with interest and fees.Banks, credit unions, online lenders
Business line of credit$5,000 to $500,000Take money out of a “wallet” of funds and only pay interest on what you actually borrow.Banks, credit unions, online lenders
Canada Small Business Financing Program loans (CSBFP)$5,000 to $1,000,000These loans are 75% backed by the Canadian government so they’re easier to get due to being less risky for the bank.Banks, credit unions, online lenders
Secured loans$5,000 to $1,000,000Use the assets of the business you’re going to buy, such as equipment or real estate, as collateral to secure a loan.Banks, credit unions, online lenders
Home equity loans and lines of creditUp to 80% of your home’s valueBorrow against the equity in your home to get financing for your new business.Banks, credit unions
Vendor financingUp to 100% of the business’s valueGet money to buy a business in Canada directly from your seller, and repay your loan based on a portion of future sales.Small business sellers

How to get a loan to buy a business in Canada

  1. Find a business to buy. Find a business to buy in Canada and meet with the owners to discuss the business’s history, including monthly expenses and revenue.
  2. Develop a business plan. Use our business plan checklist to make sure you think of everything that you’ll need to run your business day-to-day.
  3. Create a budget. Figure out how much you’ll need to pay for employees, rent, equipment and other costs to buy a business in Canada.
  4. Negotiate the price. Work with the current business owner to find a price that you’re both happy with and document your agreement in writing.
  5. Obtain financing. Compare your loan options to find a lender that may be willing to give you a loan to buy a business in Canada at the best price.
  6. Buy your business. Pay for your business based on the contract and price you established with the outgoing owner.
  7. Start making repayments. Use your personal savings and the profit from your business to make your loan payments until your business acquisition loan is paid back in full.

Steps to take before applying for a business acquisition loan

Check these boxes before you fill out your loan application to increase your chance of getting approved for a business acquisition loan:

  • Check your credit score. You’ll want to make sure your personal or business credit score is sitting at 650 or above to get the best chance of being approved.
  • Compare lenders. Compare at least 3 to 4 lenders to determine what a reasonable interest rate is and what type of terms and conditions you can expect on a standard loan.
  • Get all of your documents in order. Compile documents such as your business plan, budget, financial statements, employment records and other information.
  • Make sure you meet eligibility requirements. Double check the criteria your lender expects you to meet as it will likely not be willing to budge on basic requirements.

What do lenders look for in a business acquisition loan applicant?

Most lenders will look at the following criteria to determine how much they want to lend you for business acquisition financing:

FactorWhat lenders look for
Basic eligibilityYou’ll need to be a Canadian citizen or permanent resident who is over the age of majority in your province of residence (with valid proof of ID) to get a loan to buy a business in Canada.
RevenueYou’ll usually be expected to make over $100,000 per year to get financing if you own other businesses. You may be able to apply based on projected revenue for your future business if you can prove that it already generates significant profits.
Current debtsYou’ll have to show that you have a low debt-to-revenue or -income ratio. Find this number by dividing your total monthly debt payments by your total income or revenue. A good ratio for both categories would fall below 35%.
CollateralYour personal assets and future business assets can both factor into whether your lender will give you a loan to buy a business in Canada. You can use your assets to get a secured business loan which will usually give you lower interest rates.
Credit scoreYour business or personal credit score will influence your lender’s financing decision. Your credit score will usually be expected to be over 650 if you want to qualify for a loan to buy a business in Canada.
Down paymentThe more you can put down as a down payment, the more likely your lender will be to trust that you’ll pay back your loan. A good practice is to put a down payment of 20-30% to cover your purchase, and pay for the rest with a loan.
Relationship with lenderIf your credit score is a bit lower, you have a better chance of being approved with a lender that you already have an established relationship with. Applying to a brand new lender will usually require you to meet stricter eligibility criteria.
Personal guaranteeYou may need to provide a personal guarantee to repay the money you borrow if your business defaults. This makes financing your business less risky for a lender since it has a solid guarantee that it will get its money back.

Where to get a loan to buy a business in Canada

You may be able to qualify for a business acquisition loan with the following lenders:

Big Five and other banks

Banks tend to offer the largest business loans out of any provider. Many banks offer term loans between $5,000 and $1,000,000, although you may have to put up collateral such as your business equipment or real estate to qualify. Banks tend to offer competitive interest rates for business loans.

Credit unions

Credit unions usually offer smaller loans that sit anywhere between $5,000 and $100,000. These loans are often more flexible than bank loans and you may be required to meet less strict eligibility criteria to qualify.

  • Providers include Meridian, Servus, Vancity, connectFirst, Conexus, First West, Steinbach, Alterna Savings and Coast Capital Savings.

Online providers

Online providers typically offer financing of between $5,000 and $300,000, though you may be able to find some lenders that offer more. Larger funding amounts usually need to be backed by collateral such as business equipment or real estate. Online providers specialize in providing business loans to borrowers who are underserved by banks.

How do I get a startup loan to buy a business in Canada?

You might have a harder time applying for a loan to buy a business in Canada if the business you want to buy has been in operation for less than a year. This is because most startups lose money as they build a customer base and cover initial costs to get established.

Your best bet is to look for lenders that specialize in providing startup funding to buy a business in Canada. You should also go into any potential deal with a solid business plan and an airtight budget to increase your chance of getting approved.

6 more ways to finance a business acquisition

You may be able to get money to buy a business in Canada in the following ways:

  1. Government grants. You may be able to apply for federal, provincial or municipal business grants to buy a business in Canada.
  2. Crowdfunding. You could set up an online campaign to source the money from the general public if the business you want to buy has a solid customer base.
  3. Equity investors. Use an equity funding site such as Frontfundr or Vested.ca to get investors for your project in return for a share in your company.
  4. Use your own savings. You’ll usually want to save up at least 20-30% of the purchase price to buy a business in Canada.
  5. Ask family or friends. Ask family members or friends to help you buy a business in Canada if you know the loan won’t put your relationship at risk.
  6. Personal loan. You can take out a personal loan for business purposes. To get approved for a personal loan, the lender will need to review your personal finances, such as your credit score and income. A personal loan can be secured or unsecured.

Bottom line

You can use a loan to buy a business in Canada from an existing owner. There are several different types of financing you can take advantage of to buy a business in Canada, including business term loans and business lines of credit. If your business has a strong performance, consider a business acquisition loan from a bank or credit union. If banks or credit unions cannot approve your application, you have the option to apply with online providers.

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