Compare Personal Loans for Small Business Use for March 2021 | Finder Canada

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Can you use a personal loan for your small business?

Find out if you can use a personal loan to grow, expand or get your small business off the ground.


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To be eligible for a business loan, you’re usually required to be in business for a specified period of time – whether it’s one or two years – as well as meet any minimum revenue requirements. Between these two requirements alone, it can feel impossible to get funding for your small business.

That’s where personal loans come in. These types of loans are taken out by you as an individual, which means the finances of your business are not a concern. Instead, your ability to repay your loan and your creditworthiness are what lenders take into account.

Fairstone Personal Loan (Unsecured)

Fairstone Personal Loan (Unsecured)


26.99 % APR


  • Borrow from $500
  • Free online loan quote within minutes
  • Quick application process

Fairstone Personal Loan (Unsecured)

Apply today to get approved for a small to medium personal loan up to $20,000.

  • Max. loan amount: $20,000
  • Loan term: 6 months - 5 years
  • Processing time: Less than 24 hours
  • APR: 26.99% - 39.99%
  • Fees: None
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Can I actually use a personal loan for business?

Yes, you can use a personal loan for your business needs. Personal loans can typically be used for any legitimate reason, including financing a business.

However, you should consider the conditions a personal loan could come with. The biggest one is that your name – not your business’ name – is attached to the loan. This means as an individual, you are liable for the loan and will have to pay it back in full, whether that’s from your personal bank account or your business account. Personal loans also rely on your personal credit score to determine the loan terms and interest rates that you’re eligible for.

Quick facts about personal loans for business

  • How much can I borrow? Up to $35,000, sometimes higher.
  • How long is a typical loan term? 6 months to 5 years, sometimes longer.
  • What rates can I expect? 4.5% to 36%, depending on your personal credit score and the lender.
  • How fast can I get my money? Usually by the next business day.

Compare personal loans you can use for business

Name Product Interest Rate Max. Loan Amount Loan Term Fees Min. Credit Score Link
Loans Canada Personal Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
3-60 months
No application or origination fees
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More Info
Loans Canada connects borrowers to lenders offering both secured and unsecured personal loans in amounts from $300 to $50,000. Submit one application to get rates from multiple lenders across Canada.
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%
6 months - 5 years
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More Info
Fairstone offers unsecured personal loans up to $20,000
Mogo Personal Loan
9.90% - 47.42%
9 months - 5 years
NSF fee - $20 - $50
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More Info
Mogo offers loans up to $35,000 on flexible terms.
LoanConnect Personal Loan
Secured from 1.90%, Unsecured from 10.00%-46.96%
3-60 months
No application or origination fees
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More Info
LoanConnect is an online broker that matches borrowers to lenders offering loans in amounts from $500 to $50,000. Get approved for multiple loan offers from different lenders in as little as 60 seconds with any credit score.
Cash Money Installment Loan
6 months - 5 years
Vary across provinces/territories
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More Info
Cash Money offers installment loans up to $10,000 for AB, MB and NB residents.
LendDirect Personal Loan
19.99% - 46.93%
No end dates
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More Info
Borrow up to $15,000, based on your income and credit history, with a personal line of credit from LendDirect.
LendingMate Personal Loan
43% (British Columbia and Ontario) and 34.90% (Quebec)
1-5 years
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More Info
LendingMate offers loans to Canadians with poor credit with no credit checks. Co-signer required for application.
Fairstone Personal Loan (Secured)
19.99% - 23.99%
3-10 years
Varies by province
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More Info
Fairstone offers secured personal loans up to $35,000.
Magical Credit Personal Loan
19.99% - 46.80%
6 months - 5 years
A single administration fee of $194 for $1,500 loans and up
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More Info
Magical Credit offers unsecured personal loans in amounts up to $20,000.

Compare up to 4 providers

What do I need to qualify?

To get the most competitive personal loan, you’ll generally need to have a credit score of 650 or higher, which usually means your credit rating is good to excellent. Applying is fairly easy, although it will vary between providers. You can usually apply online, over the phone or in-person if the lender has physical branch locations.

When applying for a personal loan, have the necessary information handy, including your personal information, employment information and financial details. Depending on the lender, your application could take as little as five minutes to complete.

What if I have bad credit?

Just one small hiccup and your credit score can take a tumble. Luckily, there are ways to improve your credit score over time.

You can improve your credit score by doing things like:

  • Paying down your debt or open balances.
  • Making payments on time and in full.
  • Keeping accounts open, even if you don’t use them, to increase your account history length.

However, you may not have time to raise your credit score. If you find yourself in this situation, you could consider applying for a bad credit personal loan. Bad credit personal loans should be considered carefully, as they tend to carry much higher interest rates and fees, as well as poorer terms, than those offered to people who have good credit scores.

Are personal loans used for business expenses tax-deductible?

No, since you’re using a personal loan, the interest is not tax deductible. Interest paid on personal loans is not tax deductible in Canada, since you’re using the funds for personal purposes.

Interest paid on loans is usually only tax deductible if it’s used for generating income (and it meets the CRA’s eligibility requirements). So if you took out a business loan to fund your small business expenses, you’d be able to deduct the interest from your business income. All interest that your business pays to finance its operations is usually tax deductible.

So, is it a better idea to take out a business loan?

Since you’re able to deduct interest from your business income on your taxes, you will potentially save some money by choosing a business loan instead of a personal loan. That said, you’ll want to compare whether you’re actually eligible for a business loan – since the eligibility requirements can be harder to meet than a personal loan – and you’ll want to make sure you can get favourable interest rates and terms.

Compare both business and personal loan lenders to see which offers a lower APR and more competitive loan terms. You’ll then be well placed to make an informed decision that will save you money and provide you with the financing you need.

Compare business loans

Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
Fee based, Prime pricing starting at 9.00%
$500 - $500,000
6 months - 5 years
$10,000 /month
24 months
Unsecured Term, Merchant cash advance
SharpShooter Funding offers loans up to $500,000 for small business owners who have been business for at least 2 years and can show a minimum of $10,000 in monthly deposits.

Who it might be good for: Business owners looking for a fast and simple application process.
Merchant Growth Business Loan
12.99% to 39.99%
$5,000 - $500,000
3-12 months
$10,000 /month
6 months
Unsecured Term, Line of credit, Merchant cash advance
Merchant Growth offers loans up to $500,000 for small business owners who have been business for at least 6 months and can show a minimum of $10,000 in monthly sales.

Who it might be good for: Business owners looking for flexible financing options.
Loans Canada Business Loan
Prime Pricing from 9.00%, Long term financing from Prime + 2.00%
$2,000 - $350,000
3 months - 5 years
$4,166 /month
100 days
Unsecured Term, Secured Term, Line of credit, Merchant cash advance, Equipment financing
Loans Canada connects Canadian small business owners to lenders offering up to $350,000. Borrowers 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).

Who it might be good for: Business owners looking to use a broker to compare different financing options.
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
OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000.

Who it might be good for: Business owners looking to receive funds in as little as 24 hours.

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Pros and cons of using a personal loan for a small business


  • Quick process. It often takes much longer to complete the process for a business loan, whereas some personal loans can be disbursed within just one business day.
  • Startup friendly. Since you’re personally taking on responsibility for the loan, your business doesn’t need to meet any requirements.
  • Low interest rates. A good or excellent credit score of 650 or higher, can usually get you lower interest rates for personal loans. A business loan could be more costly if your business credit isn’t as healthy.
  • Reasonable repayment terms. With a personal loan, repayments are likely to be monthly, instead of weekly or bi-weekly.


  • Lower limits. Business loans can have large maximum borrowing amounts up into the hundreds of thousands of dollars, while personal loan maximums are generally limited to around $35,000.
  • Personal liability. You are liable as an individual to repay your loan in a timely manner. If your business doesn’t become profitable or you decide to close the business, you’ll still have to pay back the loan in full.
  • Less support. With many lenders, getting a business loan also means gaining access to tools and experts to help you grow your business. You likely won’t get this same business support with a personal loan.

4 tips to get the most out of a personal loan

  1. Consider efficiency. Think about how each purchase you make with your loan will save you time and money, either in the long term or the short term. Remember that you’ll want to be efficient with both your time and your money.
  2. Go secondhand when you can. Some business machines are built to last and don’t need more than a few repairs to keep running for decades. Some might even last longer than newer versions – a lot of new equipment is designed to become obsolete in a few years. Purchase secondhand if you can.
  3. Stock up with wholesalers. More inventory means more potential sales. Use your personal loan to take advantage of wholesaler deals to save on costs.
  4. Make an investment in marketing. Now that you have the goods, you need the customers. Investing in a marketing plan by hiring a consultant – or even doing it yourself – can more than pay for itself.

Alternatives to using a loan

  • Investors. Angel investors and venture capital investors can provide financing in exchange for a portion of your business. However, this type of funding carries its own risks and rewards – including giving up a portion of your business.
  • Credit cards. Personal and business credit cards could be a means of getting the financing you need. Plastic can be especially useful if you’re looking to make a big purchase. However, it can also be risky since you don’t physically have to hand over the money, and you may only realize what you’ve spent when you see the balance on the card statement.
  • Grants. Grants are available for many types of businesses and business owners, especially recent grads, entrepreneurs, women and minorities. Look into possible government grants and see if you’re able to secure any additional funding.
  • Bootstrapping. Financing may not be necessary if you’re in a position where you can save up the money you need and fund your business with cash as it grows.

Bottom line

There are definite benefits to personal loans for business use, depending on your situation. Startups and business owners who only need a few thousand dollars of funding may find a personal loan better suited since they’re easier to apply for and provide fast funding. But business loans can help you build your business credit and the interest paid is tax deductible through your business income.

Before you apply for a loan, take the time to compare your options in order to find the best loan for your needs.

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