Get up to $500,000 with these Canadian business loans
Rawpixel.com / Shutterstock
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware this post may contain links to products from our partners. We may receive a commission for products or services you sign up for through partner links.
Small businesses are the backbone of the Canadian economy, with 98.2% of the country’s 1.2 million enterprises considered small (less than 100 employees). Furthermore, approximately a quarter of Canadians are interested in starting or running a business. With this many entrepreneurs looking for financing, it can be challenging to find a lender to provide funds that can help your company develop and succeed.
Most banks and credit unions offer business loans, but smaller players may find they don’t meet their stringent criteria to qualify. To satisfy the growing need for small business loans, a number of online lenders and lending platforms have stepped in with competitive rates and terms. Here are our picks for the best business loans in Canada.
Comparing best business loan rates
Best business loan search platform
Online loan search engines are ideal for comparing the many options available. Some also have comprehensive information on business loans, like our top recommendation: Loans Canada.
Interest rate: 5.90%-29.00%
Eligibility: Varies depending on the lender you choose
Loan terms: $1,000 to $500,000
Repayment terms: Vary depending on the lender you choose
This Montreal-based online search platform was launched in 2012 to help Canadians easily find loans and other financial products that meet their needs. With a full platform of lenders, it’s quite easy to find something for everyone, making this an extremely flexible, multi-use service.
You can get the details on dozens of business loans in seconds on this user-friendly site. Just click on the “Business Loans” option on the home page, choose your province and select the “Commercial” tab, and you’re set. The chart will compare loan sizes, interest rates, repayment terms, and even includes user ratings and reviews.
If you’re not sure which loan really meets your needs, this is the platform to turn to.
Get a business loan or learn more by reading our Loans Canada review.
Best for new businesses
Interest rate: 5.49%-18.29%
Eligibility: Less than 6 months operational (100 days or more)
Loan terms: up to $300,000 for up to 60 months
Repayment terms: Flexible (daily, weekly, bi-weekly or monthly)
Accreditation: Canadian Lenders Association
A relatively new lender in the Canadian market, SharpShooter has been in operation since 2015, offering business loans at interest rates as low as 5.49% and working to help push young businesses.
Aside from its extremely low starting interest rate, SharpShooter stands out for its eligibility criteria. Most lenders require commercial borrowers to have been in business for at least 6 months to a year, which can leave startups out in the cold.
SharpShooter, on the other hand, will provide certain loans to businesses that have been operating for just 100 days, assuming they are already averaging at least $10,000 in monthly deposits, or accept credit or debit card transactions. Although loans with longer terms usually have stricter criteria and higher interest rates, if you’re looking for quick cash you can pay back even quicker, SharpShooter might be your best bet.
Best peer-to-peer loans
Interest rate: 5.6%-29.9%
Eligibility: 1 year operational, $100K annual revenue, 600+ personal credit score
Loan terms: up to $500,000 for up to 60 months
Repayment terms: Flexible (no early payment fees)
Accreditation: Canadian Lenders Association & Better Business Bureau
Businesses are matched with individuals who want to loan them money through this regulated peer-to-peer online marketplace, which has been around since 2014. Lending Loop might have more strict eligibility requirements than the others on this list, but they offer some of the larger amounts to small business.
Money.ca loves that there is no financial institution taking a cut, so peer-to-peer loan interest rates can be quite favorable. When you apply, Lending Loop will assign your business a loan grade, based on the information you provide. This grade, along with your other credentials will help connect you with a lender that could suit your needs.
For example, applicants that get an A+ rating through Lending Loop can qualify for rates between 5.9% and 7.5%. (The worst rating offered is E, with rates between 24.01% and 25.5%.) If your business is in strong standing and you are able to easily meet the eligibility requirements, this peer-to-peer lending platform could be the help you’ve been needing.
Get a business loan or learn more by reading our Lending Loop review.
Best for established businesses
Interest rate: 8%-29%
Eligibility: 1 year operational, $100K/year annual revenue, 550+ personal credit score
Loan terms: Up to $300,000 for up to 18 months
Repayment terms: Flexible (daily/weekly payments)
Accreditation: Canadian Lenders Association & an A+ rating from the Better Business Bureau
Founded in 2006, OnDeck is a global small business lending behemoth, with five U.S. offices, one in Australia and two in Canada (Toronto and Montreal). It has more than 100,000 customers worldwide and is publicly traded on the New York Stock Exchange. This lender is just as seasoned as your business should be in order to be eligible, but offers great terms for the amounts provided.
While it may not boast competitive interest rates, many businesses will like the longevity and size of this online lender in terms of its trust factor, which is closer to a traditional financial institution.
The eligibility requirements are a bit stricter, but if your business is established and you’re looking to secure a loan that is easy to apply for, repay and receive immediately without putting up any collateral.
How can I choose the right business loan for me?
There are several factors to consider when choosing a business loan:
Interest rates: Obviously, you want to get the lowest rate possible to keep borrowing costs to a minimum.
Fees: Find out about any application costs, fees for early repayment, late payments, or other administrative fees.
Loan term: If you need lots of time to pay back your loan, you’ll want to look for a longer term of up to five years. Keep in mind the longer the term, the more you will pay in interest.
Eligibility: Some lenders want to see a long history of strong sales, while others may be more lax with their requirements.
Repayment schedule: This can vary from daily payments to weekly, biweekly or monthly. Some lenders even let you choose the payment terms.
Loan size: Depending on how much you want to borrow, some lenders may be preferable to others.
Lender reputation: There are new lenders popping up all the time, so do your due diligence and make sure the one you are dealing with is reputable. Lenders that are members of the Canadian Lenders Association, for example, are vetted and accredited based on their corporate standards and values.
Alternatives to business loans
If you don’t qualify for a business loan, or prefer to go a different route, here are a few other financing options:
Family, friends, or equity investors
You can try to find someone who will give you money to help fund your business in exchange for a stake in the business and its profits. This can be good in terms of not having to pay back a loan, but you also end up losing some control and future earnings.
A business credit card can be a good option when only a small loan is required, and it can be paid back quickly. Otherwise, the higher interest rates charged by credit cards will come back to bite you.
Websites such as Kickstarter and GoFundMe are favourites for startups looking for seed capital from the online community, usually in exchange for equity in the business or some kind of reward.
If you have good credit, you can access a personal loan to fund your business. It’s risky, though, because if your business fails and you fall behind on your payments, it will affect your personal credit rating.
How to apply for a business loan
The requirements to apply for a business loan will vary depending on the lender you choose, but here is a general guideline of the steps you will need to take.
Make sure it suits you: Do the research, ask the questions, make sure you’re eligible (nothing worse than filling out the entire application only to find out you haven’t been in business long enough) etc.
Complete online application: All of the lenders included in our list allow you to apply for your loan online directly from their websites. Banks or credit unions may require you to apply in person
Provide requested documentation: This can include business bank statements, accountant prepared financial statements, pay stubs or notices of assessment, government identification, articles of incorporation and/or a voided cheque. Banks or credit unions may also want to see a full business plan.
Choose repayment terms: If the choice is provided, you may be able to make loan repayments once a month, bimonthly, weekly or daily.
Once the loan is approved, the funds will be transferred to you (sometimes as quickly as within 24 hours) by direct deposit, wire transfer or EFT, depending on the lender.
When should I apply for a business loan?
There are many reasons to get a business loan. Some are more obvious than others, but one thing is certain, you should apply only if you absolutely need a loan for your business.
Here are a few common reasons to take out a business loan:
- Starting a new business
- Increase productivity or expand your locations/operations
- Equipment or inventory purchases that are crucial to daily operations
- Hiring new and professional personnel
- Investing in a proven business opportunity
- Building new credit for your business as you pay off the loan
However, it is extremely important that you are financially responsible and have the ability to pay off the loan, on time, without missing payments.
The following is a list of reasons you most definitely should not apply for a business loan:
- Your business hasn’t gotten off the ground yet
- Your business is in debt already
- Impulse buys that haven’t been properly budgeted or thought out
- Paying off other debts with this loan
So, what’s the bottom line?
For entrepreneurs who want to retain equity in their company and borrow economically, business loans can be a good financing option.
Before applying for a business loan, do a thorough search to find out what various lenders are offering in regards to interest rates, size of loan, loan term, repayment schedule, fees and eligibility criteria — and don’t forget to check the lender’s credentials. You might also want to look into programs offered by the government for small and medium businesses before you turn to a lender.
You can use loan aggregator websites to help you in your search, as well. If you qualify, your business could be just a day or two away from receiving the funds it needs to grow and thrive.
Are loans considered taxable income?+
Actually, no. You can, however, claim the interest you pay on your loan as a business expense, but you cannot deduct the principal.
Can I get a business loan after having declared bankruptcy?+
Having declared bankruptcy does not necessarily mean you'll be turned away, just keep in mind that your terms might be a bit more strict, and it might, overall, be more difficult to find a loan.
Do I need a business plan to get a business loan?+
Not necessarily. It depends on the lender you're going with, however, if you're looking to secure a loan from a bank or credit union directly, you'll likely be asked to provide a business plan.