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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.

Name Product Interest Rate Loan Amount Loan Term Requirements Credit Score Link
LoanConnect Personal Loan
Secured from 1.90%, Unsecured from 5.75%-46.96%
$500 - $50,000
3 - 120 months
Currents debts must total less than 60% of income
Min. credit score: 300
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An online broker who helps inform clients towards better finances. Get pre-approved by different lenders for unsecured or secured loans in 5 minutes with any credit score.
goPeer Personal Loan
8.00% - 31.00%
$1,000 - $25,000
36 - 60 months
Recommended income of $40,000 /year
Min. credit score: 600
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Canada's first regulated consumer peer-to-peer lending platform offering unsecured loans. Connects creditworthy Canadians looking for a loan with Canadians looking to invest. goPeer strives to offer the most competitive interest rates. Apply in minutes and get a response within 24 hours.
Spring Financial Personal Loan
17.99% - 46.96%
$500 - $15,000
9 - 48 months
Min. income of $1,800 /month, 3+ months employed
Min. credit score: 400
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An online lender offering unsecured personal loans and credit builder loans. Those filing for bankruptcy or a consumer proposal can also apply. If you're not eligible for an unsecured loan, you may be offered a loan to help rebuild your credit.
ConsumerCapital Personal Loan
19.99% - 34.99%
$1,500 - $12,500
24 - 60 months
Min. income of $1,900 /month, 6+ months employed
Min. credit score: 600
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An online lender that provides fast unsecured personal loans. Complete an application in less than 10 minutes and get a decision within 24 hours. For faster loan approval, complete the Flinks bank integration in the app.
SkyCap Financial Personal Loan
12.99% - 39.99%
$500 - $10,000
9 - 36 months
Min. income of $1,200 /month, stable employment
Min. credit score: 550
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An online lender offering unsecured personal loans to borrowers with a wide range of credit scores. Apply in less than 5 minutes and if approved, receive financing in as little as 24 hours.
FlexMoney Personal Loan
18.90% - 46.93%
$500 - $15,000
6 - 60 months
Min. income of $2,000 /month, 3+ months employed
Min. credit score: 500
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An online lender offering flexible unsecured loans. Apply in less than 10 minutes and if approved, receive financing in as little as 24 hours. Pay off your loan at any time.
Loans Canada Personal Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
$300 - $50,000
3 - 60 months
No min. income or employment requirements
Min. credit score: 300
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An online broker with the largest lender network in Canada. Get matched for free with lenders offering both unsecured and secured loans through one quick application regardless of your financial situation.
Mogo Personal Loan
9.90% - 46.96%
$200 - $35,000
6 - 60 months
Min. income of $13,000 /year
Min. credit score: 500

Mogo offers a 100-day money-back guarantee. If you're not happy with your loan, pay back the principal and get your 100 days of paid interest and fees back.
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An online lender who aims for a hassle-free process through same-day unsecured loan approval and funding. Get a loan fast and track your credit score for free.
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%
$500 - $25,000
6 - 60 months
Able to make monthly repayments on your loan
Min. credit score: 560
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An online lender with a team dedicated to professional service. Get a quote for an unsecured loan without impacting your credit score. Receive funds within as little as 24 hours. No prepayment fees.
Fairstone Personal Loan (Secured)
19.99% - 23.99%
$5,000 - $50,000
60 - 120 months
Must be a homeowner
Min. credit score: 560
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Use your home equity to get a secured loan up to $50,000 with flexible repayment options and a long loan term. Get a quote without impacting your credit score.
Loan Away Personal Loan
19.90% - 45.90%
$1,000 - $5,000
6 - 36 months
No min. income or employment requirements
Min. credit score: 300
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A lender that approves unsecured loans in as little as 20 minutes. Get affordable monthly repayments with any credit score.

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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.

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.

FlexMoney Personal Loan

FlexMoney Personal Loan


18.9 %APR


  • Same day funding
  • Quick online application
  • Pay off loan anytime

FlexMoney Personal Loan

Apply online in less than 10 minutes. If approved, receive funds in as little as 24 hours. Pay off your loan at any time.

  • APR: 18.90% - 46.93%
  • Loan amount: $500 - $15,000
  • Loan term: 6 - 60 months
  • Fees: No application, origination or prepayment fees
  • Min. credit score: 500
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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.

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
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

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.

Frequently asked questions

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