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Article Contents
Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated on July 18, 2023

Visit author page
Picture of By <span>Matthew Roberts</span>
By Matthew Roberts

Updated July 18, 2023

Visit author page

5 minute read

Article Contents

Get approved for up to $50,000 and choose your loan term from anywhere between 6-60 months. We offer rates as low as 4.6% APR from Canada’s top lenders.

Banks and Lenders should be competing for your business, not the other way around. Use the power of MyChoice and compare the best offers from Canada’s top lenders today!

*Searching for a Personal Loan WILL NOT Affect Your Credit Score

Small Business Loans to Achieve Success

What do you need to achieve your business dreams? Startups and smaller businesses often require financial aid to take their trade to the next level – or simply keep them afloat. However, many small business entrepreneurs may see a cash-flow crisis looming but not know where to turn for help.

This monetary assistance you need may come in the form of a small business loan.

If you operate a trade or a shop, the best small business loans can help turn your entrepreneurial vision into reality. Today, you will find more lenders and lending channels available than ever before. The secret is figuring out how to find them, how to apply, and how to get your much-needed loan approved.

Luckily, our team at MyChoice is here to help you filter through all the possibilities to find you the lenders whose small business loan criteria best match your needs and characteristics.

What is a Small Business Loan?

Small business loans share the same basic concept pertaining to small business owners that personal loans do for individuals. Lenders provide the funds but require you as the business owner to repay, with interest and other fees, within the agreed time frame.

Those of you who run healthy small-business operations might be wondering – why take on extra debt? Sometimes—often, in fact—small business owners do not personally have the capital they need to take that next step in their growing business beyond just covering daily expenses. They either need investor-partners to infuse funds into the business, or they need loans.

Purchasing pricey assets like business equipment, increasing inventory and stock, acquiring commercial real estate, hiring new employees, and investing in marketing are just some of the reasons why business financing is a popular route to take.

Business Financing in Canada

Traditional banks aren’t the only financial bodies that provide small business loans in Canada. If you need business financing, online lenders offer convenience and versatility. You can find many affordable lenders that are willing to provide funds for your establishment – regardless of what stage it is in the average business lifecycle:

Startup Phase

Many lenders consider this phase to be the riskiest in the entire lifecycle. Since your business lies in the realm of untested waters, it might be more challenging to secure larger loans unless you can prove your business’s viability.

Growth Phase

After the preliminary phase of setting up your business, it can now start attracting revenues and growing a customer base. You can use a small business loan to secure permanent assets (equipment, property, etc.), fund the growth of marketing and sales departments, and other ventures that help your establishment flourish and meet the growing demand.

Maturity Phase

When your business begins to generate stable revenues, you can use financing to generate more working capital or pay for general corporate expenses like rent, insurance, legal fees, and utilities. Since mature businesses are a “safe” option for lenders, it’s generally easier to acquire larger funds for establishments under this phase.

Consolidation Phase

When businesses in an industry become prominent enough, they may seek to consolidate to gain a more significant portion of the entire market share and benefit from synergies. They can use commercial loans to make these ventures easier.

Keep in mind that there are many other reasons to acquire a business loan than the ones we listed above. Regardless of your business’s financial needs, you can find many ways to successfully secure a loan – as long as you know where to look for them.

What You Need to Get a Loan for Your Business

As a business owner, you can easily apply for most small business loans if your business is over a year old and it generates monthly revenue of at least $10,000. However, those looking for financial aid with lower entry points – like startups and low-income businesses – can find the best quotes among established online lenders.

Most lenders will require you to fill an application that covers your personal information, financial details, business details, and funding needs. Before approving your request, the lender may request several documents to assess your financial standing, including your business plan, credit score, financial statements, and the value of any collateral.

Business Plan: A business plan outlines your business’s goals, how you will achieve them, and how a loan will contribute to reaching these objectives. Providing a clear roadmap for your establishment shows lenders that you can hold your end of the bargain.

Credit Score: Having good credit – for both your personal and business transactions – means that you have a strong history of paying off your loans on time. With this in hand, you stand a better chance of getting a small business loan with more favourable terms.

Those with no credit score or a negative track record can still seek monetary assistance in the form of a bad-credit business loan. Lenders that offer these loans will determine your financial standing through other means instead, like revenue numbers or cash flow.

Financial Statements: Financial statements are another way lenders can assess your business’s financial health. They will check the average monthly income and compare it with both your regular and one-time expenses, as well as any outstanding debt.

A lender may check your tax returns to confirm that your financial statements match what you reported to the CRA. If they find any discrepancies, there’s a high chance that they will deny your application.

Collateral: Collateral minimizes the financial risk for lenders. If you default on the loan, your lender can seize the collateral to recoup their losses. Instead of specific collateral, most online lenders will be satisfied with a general lien on your business assets.

Deciding if a Business Loan is Right for You

Be sure to thoroughly read through the lender’s loan terms before signing anything. These terms can include the repayment period, the loan fees and interest rates, and any other conditions that may apply. By reviewing the loan terms diligently, you will have a full grasp of your obligations after accepting a loan.

You can use the factors below to find the best personal loan for a small business that checks all of your boxes:

Loan Amount

How much money can the lender provide? The factors above – your business plan, credit score, financial statements, etc. – dictate a lender’s willingness to let you borrow higher amounts.

Interest Rates

Interest rates are the rate of return that lenders require in exchange for borrowing their money. Always cover every option to ensure that you get the best rates possible. While business loans tend to have higher interest rates than a regular personal loan for a small business, they offer several key benefits, including higher financial credibility and tax deductibility.

Repayment Time

The repayment time is the prescribed length of time allotted to pay back the borrowed money. Always makes sure that your average monthly income (make informed estimates if you’re a startup) can cover the required monthly payments.

Additional Fees

Lenders may require fees upfront or ongoing costs on top of your loan’s interest rate. Some also impose penalty fees if you don’t make loan payments on time.

Apply for a Small Business Loan Today

If you need a small business loan, we can help to match you with the best quotes from several different lenders. We’ve partnered with Loan Connect to help you easily compare and whittle down the offers from these lenders to help you find one that meets your specific needs.

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