Thinking Capital is now DRIVENtm... Learn more.
Thinking Capital is now DRIVENtm... Learn more.
Thinking Capital is now DRIVENtmLearn more.
Thinking Capital is now DRIVENtmLearn more.
The balance magazine/

Three options for Canadian small business financing

Three options for Canadian small business financing
October 3, 2021

If you run a small or medium business, you might feel that your options for obtaining funding and financing are limited. Fortunately, there are plenty of ways to obtain the money you need, regardless of the size of your business or the type of loan you need. Many small business loan options are based on factors like your actual revenue and time in business instead of your credit score. Here are some of your options for SMB loans.

Traditional Bank Loans

If you have good to excellent credit, traditional bank loans are a great solution for finding the SMB loans you need. These institutions are able to offer you flexible terms and low interest rates on many of their products, whether you choose a short-term loan, a long-term loan, or even a revolving line of credit. If you have average (not poor) credit, you may be able to secure your loan with collateral. In fact, many small and medium business owners use the equity in their homes or business properties as collateral for their loans. This can be quite risky; if your business is not successful, you may lose your home to foreclosure.

Private Loans

If you have average to bad credit, there are still options. Private lenders look at much more than your credit score; they also consider the overall success of your business, your business plan, and your well-being. If you have been in business for a while and if you generate enough revenue, you could qualify for term loans based solely on your time in business and your monthly sales. The interest rates associated with these types of loans are higher than a loan you might obtain from a bank, but they are quite competitive when placed up against many of the common business credit cards that people with even good credit obtain.

Merchant Advances and Working Capital

Finally, if traditional short-term or long-term loans are not right for your needs, there are other options. Merchant cash advances and working capital loans are based solely on your business’s revenue and time in business, and they allow you to obtain the funding you need for upgrading your equipment, expanding to a new location, or even purchasing more inventory to improve on your sales. Your business needs to be at least three months old and make least $3,000 a month in revenue. You will also need a business bank account. Once approved, you can get your money in just a few days’ time, as opposed to the weeks it might take with traditional banks or even some private lenders.

If you're worried that you have bad credit, there are financing options available for individuals with low credit. SMB loans can be quite easy to obtain regardless of your credit score. Although it is true that those who have excellent credit tend to get the best interest rates, you can still get a low-cost, affordable loan for your business – all without a credit check. It truly is that simple to expand and grow, so don’t let your credit score stand between you and living your dreams.

Ready to grow your business and find new customers our there ready to try your product? Find out more about our small business loans.

More resources

Advice and research for Canadian small businesses from our expert team

We've got you

We're here to make life easier for Canadian small to medium businesses like yours. How can we help you today?