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Unsecured business loans

Compare unsecured business loans if you don’t want to secure the money you borrow with an asset or collateral.

1 - 3 of 3
Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
5.49% - 22.79%
$1,000 - $300,000
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.
Loans Canada Business Loan
6.60% - 29.00%
$4,000 - $500,000
3 - 60 months
over $10,000/month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a Canadian business bank account and show a minimum of $10,000 in monthly deposits ($120,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $500,000. Complete one simple online application and get matched with your loan options.
Merchant Growth Business Loan
12.99% - 39.99%
$5,000 - $500,000
3 - 12 months
$10,000 /month
6 months
Unsecured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months and have a minimum of $10,000 in monthly sales.

Merchant Growth offers financing tailored to business needs. It specializes in providing capital based on future cash flows, but it also offers fixed solutions. Fill out an application within 5 minutes and get your funds within 24 hours.
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Unsecured business loans let you borrow money without the need to secure your loan with an asset (such as your home, car or business assets). This means you’ll borrow money based on your credit score or business revenue – and you won’t risk losing your assets if you default on your payments. Just be prepared to pay higher interest than you would with a secured loan.

  • Alternative financing options for small businesses during COVID-19

    If your business is struggling as a result of the pandemic, you may be eligible for government-backed financing. This includes financial assistance to help you hire and retain employees, pay your business rent and maintain your regular operations. Find out more about what’s available through Canada’s economic response plan.

How do unsecured business loans in Canada work?

Unsecured business loans let you borrow money without the need for an asset to secure your monthly repayments. Your credit score is used to determine your eligibility to borrow, so you’ll usually need a good to excellent score (660+) to qualify. You may also be eligible to qualify based on how much business revenue you make.

You can expect the following features with unsecured business loans in Canada:

  • Interest rates. Usually between 5% and 36%, but you’ll pay more with bad credit
  • Amount. Typically between $10,000 and $100,000
  • Term. Between 1 and 5 years

Unsecured vs secured business loans

Use this table to compare the main features of secured and unsecured business loans:

FeatureUnsecured loanSecured loan
EligibilityYou’ll need a high credit score and/or business income to qualifyYou’ll require an asset to secure your payments
Interest ratesExpect to pay higher rates due to more risk for the lenderExpect to pay lower rates since payments are secured by your asset
Loan amountBorrow between $10,000 and $100,000 in most casesBorrow more than $100,000 if you have high equity in your assets
TermPay your loan back over 1 to 5 years on averageTake between 3 and 7 years to pay your loan back.

What can I use unsecured business loans in Canada for?

You can use unsecured business loans to pay for any business-related expenses you may have. For example, you might use your loan to supplement your cash flow, lease business real estate or expand your inventory. You’ll just need to be able to prove that any expenses you use your loan for are directly related to your business.

Woman opening her business

Where can I get unsecured business loans in Canada?

You may be able to get unsecured business loans with the following providers in Canada:

  • Banks. Bank loans are provided by one of Canada’s Big Five banks or by smaller independent chains. These loans are usually safer than online loans, but tend to come with higher rates and more strict eligibility criteria.
    • Providers include BMO, TD Bank, RBC, CIBC, Scotiabank, HSBC, Canadian Western Bank and National Bank.
  • Credit unions. Credit union loans are often more flexible than big bank loans. Just be aware that you’ll likely only be eligible for smaller amounts and you may be required to be a member if you want to borrow from certain credit unions.
    • Providers include Meridian, Servus, Vancity, Connect First, Conexus, First West, Steinbach, Alterna Savings and Coast Capital Savings.
  • Private institutions. Online loans are usually less expensive and you may be able to qualify with bad credit. The main downside is that you have a higher chance of borrowing from a predatory or untrustworthy lender.
    • Providers include Loans Canada, SharpShooter, OnDeck, Company Capital, Thinking Capital and Lending Loop.

Pros and cons of unsecured business loans

There are a number of benefits and drawbacks to getting unsecured business loans in Canada

Pros:

  • No collateral required. You won’t need to worry about losing your assets if you default on your loan payment.
  • Faster turnaround. You can get your loan faster because you won’t need to submit as many supporting documents to verify your assets.
  • Options for bad credit. You may still be able to qualify for unsecured business loans with bad credit (but you’ll usually pay much higher interest rates).

Cons:

  • Higher rates and fees. You’ll usually pay higher rates and fees since your lender has to take on more risk to lend you money (without assets to secure your payments).
  • Amount depends on assets. You can usually only borrow what your assets are worth, which could leave you with less money than you need.
  • Lender can repossess your asset. Your lender can repossess and sell off your asset to cover the cost of your loan if you don’t make your payments.

How to compare unsecured business loans

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

  • Loan amount. Look for a lender willing to give you the money you need at a price you can afford. Enlist a cosigner or use collateral to qualify for a higher loan amount.
  • Interest rates. Compare 3-4 lenders to find the best interest rates. Low rates usually fall under 12% while high rates range from 15% to 47% on average.
  • Loan terms. Choose a term that gives you repayments you can afford. Keep in mind that every year you add will drive up the amount of interest you’ll pay overall.
  • Fees. Look at the APR (fees + interest) to determine the total cost of your loan. 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. Find out 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 unsecured business loans in Canada

You can apply for unsecured business loans in Canada 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 unsecured business loan.
  3. Input personal information. Input information such as your full name, date of birth, address, phone number and email.
  4. Provide business details. Provide details about your business such as your company address, years in operation, annual revenue and business assets/debt.
  5. Supply financial information. Input information about your bank account such as your bank name, transit number and account number.
  6. Agree to a credit check. Give your lender permission to check your credit score as part of the application process.
  7. Provide supporting documents. Append required documents to your application to verify your ID, revenue and other information about your business.
  8. Submit your application package. Submit your application and wait for approval.

Loan eligibility requirements

To qualify for unsecured 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 unsecured 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 unsecured business loans.

Can I get unsecured business loans with bad credit?

You may be able to get unsecured business loans with bad credit if your company performs well. Your lender will usually consider factors such as how established your business is, how much revenue you make and whether you have any other business debts. Just prepare yourself to pay much higher interest rates if you apply with bad credit.

Alternative solutions to get a business loan without collateral

Explore these options if you want a different way to access unsecured cash for your business:

  1. Merchant cash advance. Get a lump sum of cash and repay the full amount based on a percentage of your business’s credit/debit card sales.
  2. Business credit card. Apply for a business credit card to fund smaller business expenses but expect to pay higher interest rates if you hold an outstanding balance.
  3. Business line of credit. Choose a line of credit if you want funds to be available when you need them, but only pay interest on what you actually borrow.
  4. Outside investors. Pitch your business to angel investors, launch a crowdfunding campaign or ask friends or family for a loan to get the capital you need.

Bottom line

You can apply for unsecured business loans in Canada with no need for collateral. These loans tend to come with higher interest rates than secured loans. You’ll usually need good credit to qualify unless you can prove that your business is well-established and makes a high revenue. Find out more about unsecured business loans, compare lenders and learn how to apply today.

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