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Small Business Loans in Canada

Qualifying for a small business loan in Canada can be tricky. Most traditional financial institutions have very high standards and will pick your business model apart looking for reasons to deny your application.

Thankfully, Loans Geeks offers online access to a great number of non-traditional small business loans in Canada. Read more to learn about how you can receive a small business loan in Canada through one of our partners.

What is a Small Business Loan in Canada?

The definition of a small business varies based on who you’re talking to and for what purpose. The Canadian government defines a small business as one with $5 million or less in revenue per year. Individual lenders often have their own definitions which may also take into account the number of employees you have.

In Canada, a small business loan allows you to cover anything from payroll to property and equipment costs. You typically have much greater flexibility in terms of what you can do with a private loan versus a loan through the Canadian Small Business Financing Program (CSBFP). For example, CSBFP funds can only be used towards purchasing or improving property or equipment and covering business registration costs. Private lenders understand that those are just a small sampling of the many expenses you face, which is why they’re willing to offer small business loans in Canada under less restrictive terms.

Benefits of Small Business Loans in Canada

Lower Interest Rates than Other Types of Financing

Even if your business is in a cash flow bind for the moment, lenders often take revenue and assets as a sign of reliability. This differs from unsecured personal loans, the structure of which often prompts lenders to charge higher rates. Small business loans in Canada have especially low rates when compared to credit cards.

Flexible Repayment Terms

Another downside to relying on credit cards for major business expenses is that the bank always expects a specific amount of money on specific dates. Small business loans in Canada can be much more flexible.

Retain Control in Your Business

Aside from personal loans and credit cards, many business owners consider investors as a means of receiving an influx of cash. While investors can certainly take your business to the next level, you’ll also be giving up at least some control of your business unless they agree to be a silent partner. Companies providing small business loans in Canada don’t really care about the day-to-day operation of your business as long as you make repayments per the agreement.

A major upside here is that you also keep your future profits rather than having to share them with an investor.

Types of Small Business Loans in Canada

Loans don’t always have to be a lump sum that immediately begins accruing interest. Here are some of the many options available.

Instalment Loans

With an instalment loan, a financial institution will lend you cash and then collect regular payments towards the debt. You’ll also pay interest, the rate of which depends on the lender’s evaluation of your creditworthiness. Most people are familiar with the concept of instalment loans via mortgages and other home loans.

Line of Credit

With a line of credit, your business receives access to a pool of funds rather than the cash itself. The key difference is that you’ll only pay interest on the amounts you use. This makes a line of credit potentially more efficient if your business has recurring needs that its current cash flow cannot service.

Merchant Cash Advance

A merchant cash advance is designed to help you access tomorrow’s revenue today. The lender will provide a lump sum and then collect a percentage of your future revenue until that debt is repaid, plus interest.

Can You Get Small Business Loans in Canada with Bad Credit?

Most small business lenders in Canada will take your personal credit score into consideration when evaluating your application. However, some lenders give less weight to your personal score than others. In other words, you certainly can get a small business loan in Canada with bad credit, provided you work with a lender who gives more weight to your company’s financials.

Short Term Small Business Loans in Canada

If your business is in a growing phase, if you need to prepare for a peek season by making a purchase, or if your cash flow is fluctuating, short term small-business loans in Canada might be a great option for you. Also, if you want to make an investment in your business that will pay off under 2 years, allowing you to pay the short-term small-business loan back, it might be an excellent choice.

These are some typical scenarios where short-term small-business loans in Canada can help the business owners:

  • To cover operation-related expenses that are temporary. Short-term small-business loans might help in a scenario when you need to hire additional employees during the peak season or to complete some projects.
  • To bridge a cash flow. If you anticipate funds coming soon but you don’t have sufficient working capital at this moment, a short-term small-business loan might be a good option. It will allow you to focus on your business operations instead to worry about your finances.
  • To deal with surprises. Most small-business owners experience some unexpected surprises every now and again. Those vary from having to replace a broken piece of equipment to seizing an opportunity to get a discount on bulk orders. Short-term small business loans can help with this.

How to Apply for a Short-Term Small-Business Loan in Canada

Many small-business owners first try to get a line of credit from a bank to meet their funding needs. However, due to strict and conservative criteria of traditional financial institutions, they go through a lot of hassle and a lengthy process, only to find out their application was rejected, often missing on the opportunity for which they needed a small business loan in Canada in the first place.

A business line of credit is a great option for those who have access to it. However, for many others, Loans Geeks will present a great opportunity to get matched against a great number of reputable loan lenders in Canada, who offer small business loans at competitive rates, in an easy, fast, and hassle-free way.

Inventory Small-Business Loan in Canada

If your small business is a retailer or product-focused, you might need an inventory small business loan.  With this type of small business loan in Canada, you will be able to obtain the needed inventory to prepare for a busy season ahead. It is always easier to opt for this kind of small-business loan when you know you’ll be able to pay it off in a very short time after you sell the products. The shorter the term for your small-business loan repayment, the less interest you will need to pay on the loan.

This type of small-business loan in Canada is a good option for businesses that have storage or warehouses and need to keep big amounts of inventory in stock. Many medium to large wholesale retailers might have just enough inventory for the next few months, but not enough working capital to replenish their stock beyond that.

How Can I get an Inventory small-business Loan in Canada?

Traditional lenders in Canada, such as banks, are typically reluctant to approve loan requests to any small business apart from well-established ones with good sales. Even if your business belongs to this category but has limited working capital, banks will probably not approve your application.

With Loans Geeks, however, your small business has a good chance to get matched against non-traditional, yet reputable loan lenders in Canada that can provide you with the right-fit funding that you need.

Retail Small Business Loans in Canada

Many retailers opt for Loans Geeks to secure small business loans in Canada, freely using the funding to make their business grow. The small business loans for retailers in Canada are especially convenient if they need:

  • To hire new employees
  • To invest in new equipment or technology
  • To upgrade fixtures or furnishing
  • To purchase more inventory
  • To launch a marketing campaign
  • To expand (open a new store)

Equipment Small Business Loans in Canada

Equipment small business loans can be a good solution for those small businesses who would like to have the benefits of owning the equipment, while not yet having enough capital to make this purchase. Some of these benefits include:

  • Preserving working capital, spreading the cost of the purchase over extended periods, while retaining the ownership over the purchased goods.
  • Getting flexible terms. Some small business loan lenders in Canada, available via Loans Geeks, offer customizable and highly flexible terms for equipment-based small business loans.
  • Getting a small business loan in Canada for the equipment via Loans Geeks is fast and simple. Filling in the application form only takes a few minutes, while waiting for a response is never longer than 2-3 business days.
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There is a certain number of requirements that your small business needs to meet in order to qualify for a loan via Loans Geeks.

  • Your small business needs to operate in Canada
  • Your small business needs to operate for at least 12 months
  • Your annual revenue needs to be at least $100,000

In most cases you will not need to provide a business plan. Most loan lenders available via Loans Geeks offer loans against the bank statements. However, if you are requesting a larger sum of money, you might need to provide a business plan as well.

The evaluation process takes 2-3 business days. If your loan application has been approved, it usually takes 1-2 additional business days to receive the funds to your bank account.

Typically, loan lenders offer repayment terms that range from a few months to a few years.

When you apply for a small business loan via Loans Geeks, and if your small business qualifies, you will get up to five offers with the most competitive rates available.

Methods of repayment depend on the lender and if they are not openly stated, ask about it before closing the deal. Usual repayment methods are from the company’s bank account or by credit card. Also make sure that you can prepay the loan at any time.

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