Are you looking to open a new business but don’t have the funds? Or, maybe you already own a business, and you want to expand? A business loan could help you in both scenarios, so you’ve come to the right place! We are going to examine some of the best business loan lenders in Canada. There are plenty of great options, but the ones we are going to discuss have great interest rates and are reliable.
Keep reading to learn more about what the best business loans in Canada are for you!
Best Business Loans In Canada Reviews
1. Loans Canada
Starting off our list is Loans Canada, a lending platform that started in 2012. They have provided more than 1 million loans to Canadians and have the largest lender network in the country. Loans Canada offers a variety of business loans. This includes traditional business loans, commercial mortgages, and a business line of credit.
As it is a lending platform, Loans Canada matches Canadians with online lenders. They partner with lenders that offer personal loans, auto loans, debt relief, and small business loans. Loans Canada acts as a middleman between you and the lender.
Eligibility for a small business loan varies, depending on the lender. But Loans Canada specializes in helping Canadians with a bad credit score to still be approved for a loan.
A loan calculator is available on their website. This allows you to see an estimate of your loan and the monthly repayments. If you input your credit score, you will also see a more accurate estimate of your loan eligibility and the interest rate you will be required to pay.
To apply, you first select the loan type you are interested in. You then quickly and easily fill out an application online. Loans Canada will then match you with the best loan provider for you.
Loans are available up to a maximum of $300,000. This is much higher than many of Loans Canada’s competitors. Loan terms are available for up to a maximum of 60 months.
Here are some of the pros and cons of finding a business loan through Loans Canada.
Pros
- Loans Canada partners offer low-interest rates, ranging from 5.49% to 25%.
- Loans Canada’s website is super user-friendly. All the online lenders that meet your requirements will be put into a chart. This will help you compare each loan in terms of the loan amount, interest rate, and repayment terms.
- No collateral is required, although you can choose a secured loan if you prefer.
- There is no minimum credit score or annual income requirement.
- You can typically receive your money (once approved) within 48 hours.
- Everything is done online, from applying to getting approved, to receiving your money. This makes the process easy and stress-free.
- Repayment terms vary based on the lender, but they tend to be flexible.
- Loan repayments are available in small, affordable installments.
- Even if you or your business has a bad credit score, you may still be accepted for a loan. This is because Loans Canada partners with lenders that specialize in bad credit loans.
- Customer services are available 24 hours a day. They can be contacted by phone, email or via social media.
- Loans Canada offers a plethora of educational resources on their website. This includes information on how to manage your budget and improve your finances. They also offer an active blog with articles and videos.
- The Borrower Community asks borrowers to rate and review lenders. Loans Canada will then remove any lenders from their platform who have consistently bad reviews. You can easily access previous borrowers’ reviews.
Cons
- Even though Loans Canada works with Canadians with a lower credit score, their lenders may charge a higher interest rate.
- Depending on the lender and your repayment terms, you may be charged if you repay your loan early.
- You can only compare loans from the lenders that work with Loans Canada.
Summary
Loans Canada works with lenders that offer a wide range of small business loans. This makes them a great choice for any business. You are in control of your loan amount and term and can often find a great interest rate at Loans Canada.
With Loans Canada, you don’t need to put your business up as collateral. This will help give you peace of mind, especially if you need to take out a big loan.
Ultimately, using Loans Canada is one of the easiest ways to compare the offerings available to you from multiple lenders at once. This will help you find the best lender that suits your business specifically.
If you are unsure of the type of loan you are likely to qualify for, the interest rate you are likely to pay and the repayment amounts you can visit Loans Canada for more information. Their loan calculator is a useful tool, and you can submit a loan application with no fee or obligation.
2. Borrowell
Borrowell is one of the largest online lenders in Canada, with more than 50 financial partners across the country. More than a million Canadians are current Borrowell members.
In addition to small business loans, Borrowell offers a variety of other loans. This includes personal loans, mortgages, car loans, and debt consolidation. Their loan platform acts as a search engine, allowing you to search through potential lenders to find the best loan option for you.
Borrowell works by offering you a free credit check. They were the first lending platform to offer free credit checks through Equifax. Your credit score is used as part of Borrowell’s pre-approval process. Your credit profile will be accessed, and you will be provided with a list of the loans you are likely to be accepted for. Applying for pre-approval reduces the likelihood of your loan application being declined. This helps to protect your credit score.
Borrowell aims to help Canadians improve their credit score. They offer weekly credit score updates and free personalized tips on how to improve your credit profile. This can help you to improve your personal or business credit score. Borrowell’s customers have seen their credit scores rise by an average of 15 points.
Submitting an application to Borrowell is quick and easy. Once your loan application has been approved, you will receive your funds within 48 hours!
Loans are available from $500-$35,000 and loan terms range from 6-60 months.
To help you decide whether Borrowell is the best option for your business loan, let’s take a look at some of the pros and cons.
Pros
- You can monitor your credit score for free. It will update every week and checking it won’t lower your score.
- Applying and receiving a loan (if approved) with Borrowell is quick. You can get your money within 48 hours in most cases.
- Once you have been provided with a list of loan options, you can tailor your search to include specific requirements.
- Flexible repayment terms are available. If you want to repay your small business loan early, there will be no penalty.
- The whole process is completed online, so you don’t even need to leave your house.
- Borrowell shows you the likelihood that you will be approved for a loan without performing a credit check. This helps to protect your credit score.
- All of Borrowell’s fees are clearly outlined and explained, as they value transparency.
- Borrowell offers interest rates on the lower side, ranging from 5.6% to 29.19%.
- Paying your loan in full, on time, will help raise your credit score.
- Borrowell offers a variety of products. You can apply for a business loan, personal loan, car loan, debt consolidation, or a mortgage.
- Your minimum income only needs to be $20,000 to get approved for a loan.
- Checking your credit score and receiving credit score updates have no negative impact on your credit rating.
- Borrowell does not perform a hard credit check until you submit a formal application. This helps to protect your credit score.
- You can choose a secured or unsecured loan.
- The online platform and mobile app have a good interface and are user-friendly.
- If you have experienced bankruptcy, you may still be accepted for a loan.
Cons
- Borrowell charges an origination fee of 1% to 5%.
- The maximum loan you can get with Borrowell is $35,000.
- Eligibility requirements are strict. If your credit score or income is too low, you may not get approved.
Summary
Borrowell’s huge lending network makes them highly attractive to many loan customers. That being said, their eligibility requirements are quite tight. You may be likely to be rejected if your credit score is too low (anywhere from 300 to 600). Similarly, as Borrowell only offers a maximum loan of $35,000, this may not be the best option for every business owner.
Borrowell’s free credit score information and weekly credit score updates are great for businesses looking to improve their credit rating. The flexible repayment option can also be advantageous to businesses with changing finances.
If you have good credit, a yearly income of $20,000, and only need a small loan, Borrowell may be a good option for you. If not, You may want to look at another lender or lending platform we discuss in this guide.
3. LoanConnect
Another great search engine for a business loan in Canada is LoanConnect. Although they are based in Toronto, they help Canadians in every province and territory find the perfect loan. LoanConnect acts as a middleman between you and the lender.
LoanConnect offers a variety of loan types. This includes business loans, personal loans, student loans and debt consolidation. They also specialize in bad credit loans, as they do not have a minimum credit score requirement. This could be a big advantage to smaller businesses or new businesses with little credit information.
Applying with LoanConnect is easy and should not take more than five minutes. All you need to do is input some personal and financial information and the kind of loan you’re looking for. LoanConnect will then show you lenders that match your needs. You can then customize your loan to fit your financial requirements.
You can also opt for pre-approval. This involves LoanConnect accessing your credit score. They will then recommend lenders that are likely to accept your loan application. LoanConnect will offer you a list of potential loans. You can then tailor this list as per your requirements.
Loans are available between $500-$50,000. Loan terms range from 6-60 months.
Here are some of the pros and cons of choosing a business loan with LoanConnect.
Pros
- Eligibility is not too strict. You just need to be a Canadian citizen that is the age of majority in your province. You can also have bad credit, but your debt can’t be more than 60% of your income.
- The loan term can be anywhere from 6 months to 18 months with a maximum of 60 months.
- Interest rates start as low as 4.6% but will vary depending on the lender and your credit rating.
- Using LoanConnect to search for a lender is free.
- LoanConnect offers 12 different loan types.
- LoanConnect is partnered with lenders who specialize in business loans.
- Available to Canadians in any province or territory.
- There is no minimum credit score or annual income requirement.
- You can customize your loan to include your desired loan term, interest rate and repayment amount.
- You can still apply for a loan if you have a bad credit score or little credit information.
- Searching for loans and applying for pre-approval does not affect your credit score. LoanConnect will only conduct a hard credit check when you submit a formal loan application.
- LoanConnect is available in every province and territory. They are popular with Canadians all over the country.
- LoanConnect’s online platform is free to use and obligation-free. Searching for loans does not affect your credit score.
- LoanConnect is also great for those who are looking for smaller loans over a shorter period. You can choose a loan as low as $500 over a term as low as 6 months. LoanConnect is likely to offer you better interest rates than many other short-term loan providers.
Cons
- Maximum loan of $50,000.
- Not an option for those with debt that totals more than 60% of their income.
- The list of lenders is limited to those who partner with Loan Connect.
Summary
As LoanConnect is a free search engine, it is a great option for those looking to compare multiple lenders at once. LoanConnect is also readily available to Canadians from all over, even those with bad credit. So, even if you were rejected by the bank, LoanConnect could still help you find the perfect loan.
If you have a lot of debt, however, LoanConnect may not be able to help. Similarly, if you need a business loan of more than $50,000, you will need to look elsewhere.
LoanConnect offers great business loans at competitive rates. Searching for loans on their website and applying for pre-approval is free. You are also not obligated to commit to any of the loans. If you are still unsure, visit LoanConnect’s website to view your options and see what business loans may be available to you.
4. RBC Royal Bank
RBC is one of the largest commercial banks in Canada and has been providing loans for more than 150 years. They have more than 17 million customers across Canada.
RBC Royal Bank offers Canada Small Business Financing Loans (CSBFLs). This is a great option for businesses looking for larger loans. CSBFL is a government-sponsored loan program that offers up to $1 million as a loan for small businesses. If you are looking for a loan for equipment and leasehold improvements, you can access up to $350,000.
These loans are specifically recommended for new businesses looking for financial support. Alternatively, they are recommended for established businesses looking for more investment.
85% of the loan is guaranteed by the Federal Government.
There are several term types available, including:
- Equipment loads up to a 10-year amortization.
- Leasehold improvements up to a 7-year amortization.
- Property loans up to a 15-year amortization.
When searching for a business loan with RBC Royal Bank, you can first apply for pre-approval. RBC will use your credit score to offer you a more accurate estimate of your business loan options. You can then tailor this search to include your loan requirements.
Let’s take a look at some of the pros and cons of taking a business loan with RBC Royal Bank.
Pros
- Purchases made within the last six months are eligible for financing.
- Several repayment options are available. This includes floating-rate principles and fixed-rate principles plus or including interest.
- Receive free access to your credit score through RBC’s online banking.
- You can choose to make minimum payments and then make higher monthly payments when your budget allows it. Alternatively, you can opt for a fixed payment schedule.
- You can switch to a variable rate loan or pre-pay your loan at any time with no financial penalties.
- The Skip a Payment option allows you to skip one payment per year with no financial penalties.
- Payments can be made weekly, bi-weekly, semi-monthly, or monthly.
- With more than 1,2000 branches across Canada, you will likely never be far from an RBC Royal Bank. Alternatively, you can contact them via phone, email or through their website.
- RBC provides free tips, advice, and education resources. This includes video tutorials on a variety of topics.
Cons
- There are some high fees to be aware of. This includes a $100 application fee and a $175 documentation fee. You will also be charged 2% of the loan amount as a registration fee and a 1.25% administration fee.
- As a big bank, RBC Royal Bank has stricter eligibility requirements than some of the other lenders listed in this article.
Summary
A business loan from RBC Royal Bank is a great option for businesses looking for larger loans. Loans up to $1 million are available and 85% of the loan is guaranteed by the government. This can be a real advantage to many businesses.
RBC Royal Bank also offers some great repayment options and allows you to customize your repayments to suit your finances.
However, as they are a big bank, it may be more difficult to be accepted for a loan. If your credit score is not rated as at least ‘good’, you may not be accepted for a loan.
Searching for loans and applying for pre-approval is free and requires no obligation. If you are unsure whether you are likely to be accepted for a loan or are interested in the loan terms you may be offered, visit RBC Royal Bank’s website for more information.
5. BDC
The Business Development Bank of Canada (BDC) is a bank designed specifically for Canadian entrepreneurs. They have been operating for more than 75 years and currently support small and medium-sized businesses in all industries. They currently work with 72,000 entrepreneurs across Canada offering loans, investments, and advisory services.
BDC separates business loans into three different categories:
- Businesses in operation for less than 12 months.
- Businesses in operation for between 12-24 months.
- Businesses in operation for more than 24 months.
BDC offers financing for a variety of reasons, including:
- Small projects – This allows you to access funds quickly and easily.
- Commercial real estate – Including buying or renovating facilities.
- Working capital – Protects cash flow during ongoing projects.
- Purchasing or transferring a business.
- Equipment purchase
- Purchase orders
- Technology purchase – Including hardware and software.
- Financing for tech companies.
To apply for a business loan with BDC, you need to complete an online application. You will need to answer questions about your business, the reasons you require the loan and any information about your shareholders.
Loans are available up to $100,000, with loan terms generally set at 5 years. The floating base rate of interest is 6.05%. Additional interest will be charged at between 1-12%.
Pros
- BDC has dedicated teams to help Indigenous entrepreneurs and Black entrepreneurs. They also offer loans aimed specifically at women, young entrepreneurs and newcomers.
- If you are looking for a loan to help you accelerate your digital transformation, BDC may offer loans with a 0% interest rate.
- A business loan calculator is available on their website.
- BDC can help you to create a business template and improve your business plan.
- The first six months’ principal of the loan can be postponed. You can then choose to pay only the interest payments.
- You can pay off your loan early or make lump-sum payments with no financial penalties.
- Once your application has been approved, you can receive the money in 4-48 hours.
Cons
- A personal guarantee is required when you take out a loan.
- Alternative loan terms are not available.
Summary
BDC is a government-owned loan provider that is an excellent alternative to traditional banks. They offer loans in all industries with some great terms. BDC is designed specifically for entrepreneurs, meaning their loans are well designed. Their website also features some useful information and educational resources for business owners in Canada.
BDC does not offer unsecured loans. They also typically only offer loans to businesses that have been operating for more than two years. Although they will recommend a partner program for newer businesses.
Visit BDC’s website today for more information.
Business Loan Fees Explained
Like with any type of loan, business loans come with a variety of fees. The main fee you will have to pay is the interest rate. The interest rate you will pay throughout the term of your business loan will be decided beforehand. The interest rate can be a fixed rate or floating rate depending on what you agree upon with the lender.
The next fee you may have to pay is a registration/ origination fee. This is usually a one-time fee to financing institutions to process your small business loan application.
If you make a monthly payment on your small business loan and it gets rejected, you may have to pay a fee to the lenders. Make sure you keep track of when payments are due to avoid this charge.
Depending on the lender, you may have to pay for a monthly administrative fee. This fee can range from $50 to $100 a month.
Lastly, lenders may also charge a transaction fee to send business owners their loan each month. This often depends on the method used to deposit the money. For example, wire transfers tend to come with a higher transaction fee than cheques.
When to Get a Small Business Loan in Canada
You may be wondering when the best time to get a small business loan in Canada is. The easiest answer would be: when starting small businesses. It’s called a start-up business loan. This is not the only time you can and/or should consider taking out a small business loan, though.
You may already have a few small businesses in your possession and want to expand or renovate your current business. Small business loans could help you with that.
Maybe your small businesses are lacking inventory or staff because you don’t have the money to outright purchase items or hire people. This would be another good time to consider taking out a loan for a business.
Small business loans could also help business owners build up their business’ credit. Your personal credit history is different from your business credit history. Even if you have a perfect personal credit rating, it won’t reflect much on your business’ credit reputation.
Lastly, you may be considering investing in a new business opportunity. If you don’t have enough money out of pocket to do so, small business loans could be of help.
Ultimately, the best time to get small business loans is when you are financially ready to do so. If you need a small business loan and have enough money to make monthly payments with the interest rates, do it! Just make sure the interest rates aren’t too high. Otherwise, you will end up spending a good portion of your money paying off the interest rates.
The Bottom Line
Although picking the best business loans company is hard, we’ve narrowed it down to five. Loans Canada, Borrowell, LoanConnect, RBC Royal Bank, and BDC are all great options for those looking to take out small business loans. Their rates vary. Their terms can range from 6, 12, 18 months or more, and they offer different loan amounts. However, all three companies are reliable and easy to work with.
Every dream to open a business needs financing. The best way to go about it is to find lenders that suit your needs and your business’ needs specifically. Don’t settle for interest rates you can’t pay or lenders with unreasonable fees.
If you need any more business or financial advice, INCOME.ca is here for you! Head to our homepage to read more about starting a business, taking out various loans, insurance, banking, and more. We’re here to help you become the best business owner you can be.
