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Business loans rates in Canada

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thinking capital - comparewise business loan

Thinking Capital

$5,000 - $500,000
Loan Amount
Starting at 8.39%
Apr Range
  • Minimum 18 years of age
  • Canadian-based business
  • 6+ months in business
ondeck - comparewise business loan

Ondeck

$5,000 - $300,000
Loan Amount
Starting at 7.99%
Apr Range
  • Annual revenue $120,000+
  • Credit score at least 550
  • 12+ months in business
merchant growth - comparewise business loan

Merchant Growth

$5,000 - $500,000
Loan Amount
Starting at 12.99%
Apr Range
  • Minimum $5k in sales/month
  • Canadian-based business
  • Bank Statements

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Business Loans

Best Business Loans in Canada

Are you planning to get a business loan to scale your business? You’ve come to the right place. A business loan is a deal between a growing business and a lender that is meant to be a mutually beneficial agreement between the two parties. Your business gets a boost in capital to help with operations and the lender profits at the end of the deal by collecting interest. At Comparewise we strive to match as many businesses with their ideal business loan deal.

Welcome to Comparewise

Whether it is a small or large business the need for a business loan always appears. Most banks offer business loans as well as the majority of credit unions. Now in the ever-growing day of technology there are also locations online that are great for applying for business loans. Small businesses, those with 100 or less employees, are known to have a harder time finding business loans than larger, more established, businesses. Again, with the advances in technology there are more opportunities for small businesses than there have been in the past.

There are several different types of business loans including small business loans, business lines of credit, collateral loans, and more. It is important that a business applies for the loan type to best fit their needs to avoid the loss of financial credibility. A business with no financial credibility will have a hard time being successful.

When looking into a business loan in Canada there are a few things to keep in mind. The term of the loan, the interest rate, and make sure the lending source is accredited. An interest rate can either be fixed or variable. A fixed interest rate will be agreed upon at the time the loan is approved and will not change for the duration of the loan.

A variable interest rate can change throughout the duration of the loan depending on the amount of the loan. A successful business needs access to financing and business loans are a great way to get that financing.

Some of the best business loans in Canada offer amazing interest rate and flexible repayment plans. Lending Loop, Loans Canada, SharpShooter Funding, Company Capitol, and OnDeck are some of the best business loan lenders in Canada. They have great resources to help businesses choose the right loan for their needs and the application processes are simple and faster than some other banks and credit unions.

lending loop - comparewise

1. Lending Loop

Lending Loop is a great location for peer-to-peer loans. They have been operating since 2014 and are accredited by the Canadian Lenders Association and the Better Business Bureau. This platform is a regulated peer to peer marketplace. Located only online, businesses can be matched with individuals who want to loan them money. Peer to peer lending also provides more favorable loan interest rates. This is one of the best business loan platforms.

They are stricter than some banks when it comes to eligibility requirements. However, they also offer larger amounts to small businesses than some banks are known for. When a business comes to Lending Loop to acquire a business loan the business will be given a loan grade based on the information given during the opening processes.

The grading scale goes from A to E, an A grade receives the best interest rates, and an E grade is given higher interest rates. The grade given to the business helps Lending Loop connect the client with a business loan lender that fits their needs the best.

 The interest rates given on Lending Loop for a business loan can range from 5.6% to 29.9%. To be eligible for a business loan through lending loop the business has to be in operation for at least one year, have a $100 K annual revenue and a 600 or more personal credit score.

The loan amounts typically given out can range from $5,000 to $500,000 and the repayment periods are flexible and have no early payment fees. This is one of the best business loan locations because there is no financial institution taking a cut.

loans-canada-business-loans-comparewise

2. Loans Canada

Loans Canada is based in Montreal. They are an online search platform that was launched in 2012. They started out focusing on personal lending but have been able to expand and now offer bad credit lending and commercial loans. Loans Canada is a great place to acquire a business loan because they are flexible and a multi-use service. With one application businesses are matched with several commercial lenders that they can then choose from. 

This is another online service; they are there to connect the business applying with a third-party lender. When choosing from the options focus on the interest rates, terms, and requirements each lender asks for as they will be different. This may seem overwhelming, but Loans Canada offers a good organization system to help businesses choose the best lender.

After selecting commercial loans and the province the business is located the website will provide a chart. The chart outlines loan sizes, interest rates, repayment terms and includes other user ratings and reviews. It is great to be able to see what other businesses have experienced when applying for a business loan with that third-party lender.

The interest rates across the lenders can range from 5.49% to 25%. The eligibility and repayment terms differ depending on the loan carrier chosen. The loan terms can be up to $300K for 60 months. Loans Canada is a great place to get a business loan in Canada if the business is unsure which kind of loan will best meet there needs. Loans Canada makes it simple with one application and a comparison chart. This is one of the best online business loan sites easily matching Canadian with the business loans they need.

sharpshooter-funding-business-loans-comparewise

3. SharpShooter Funding

SharpShooter Funding offers the best business loans for new businesses. They are new to lending in the Canadian market only being in operation since 2015. They are in the market to push and help young businesses reach their fullest potential. They are less strict than Lending Loop about eligibility. Instead of being in business for a full year, SharpShooter Funding will help businesses that have only been in operation for 100 days.

There are stipulations to this leniency. The business has to have made at least $10,000 in monthly deposits or they must accept credit and debit card transactions. The eligibility criteria for this business loan lender stands out the most among the competition.  

 The interest rates offered through SharpShooter Lending can range from 5.40% to 18.29%. The loan terms depending on the business needs can range from $4,000 to $300,000 for 6 to 60 months. The repayment period can be flexible, the business can choose if they would like to make daily, weekly, biweekly, or monthly payments. SharpShooter Funding is accredited by the Canadian Lenders Association. A business looking for quick cash and a quick payback plan will find SharpShooter Funding to be the best business loan lender for them.

company capital - comparewise 1

4. Company Capitol

Company Capitol is a great option for those looking for a short-term business loan. Company Capitol is a private Victoria, BC-based Canadian company. They have been assisting small businesses across Canada for over 20 years. They offer one of the best business loans in Canada and they are loved because they offer a short two-page application that is one of the easiest to fill out.

Company Capitol is also a favorite because they allow the business to decide the repayment terms that would best fit their business’ needs. This courtesy is another reason why Company Capitol is one of the best business lenders in Canada.

Company Capitol offers an interest rate that starts at 6.87% and can go up depending on the businesses eligibility. To be eligible for the loan the business needs to have been in operation for six months and have a $5,000 per month minimum income. The loan terms can range from $5,000 to $100,000 for 3 to 18 months.

The repayment plans are normally short, but the business does get to decide what repayment terms they can handle. Company Capitol is accredited by the Canadian Lenders Association. This business loan best suits businesses that are looking for brief cash flow that they can pay back quickly.

ondeck - comparewise 1

5. OnDeck

OnDeck is a business loan provider that helps small businesses but is best for an established business. OnDeck was founded in 2006, they have 5 U.S. offices, 1 office in Australia, and 2 offices in Canada. They serve over 100,000 business customers across the globe. They are truly an established lender in the world and are publicly traded in the New York Stock Exchange.

They are accredited by the Canadian Lenders Association, and they have an A+ rating from the Better Business Bureau. OnDeck is a more traditional lender, they are a traditional financial institution and that makes them more trustworthy to their customers.

OnDeck offers interest rates between 8% and 29%. They have loan terms that can range from $5,000 to $300,000 for 3 to 18 months. OnDeck’s repayment plans are somewhat flexible and can be paid back daily or weekly. OnDeck is a more traditional lender which means their eligibility is more strict than some of the others discussed above.

The business must have been in operation for at least 1 year, they must have an annual revenue of $100K, and a personal credit score of 550 or higher. OnDeck is one of the best business loans in Canada, if the business is established and looking for a loan they do not need collateral for. OnDeck can secure a great loan option with a repayment plan that best suits the business needs.

What are business loans?

A business loan is similar to a personal loan, but the eligibility requirements are different. A business usually has to be registered and be an operational establishment for at least 1 year before they are eligible for the best business loans in Canada.

Personal loans tend to have lower interest rates than business loans as well. One of the other significant differences between a personal and business loan is the amount of time it takes to be approved for the loan. A business loan application and approval time will take longer than when applying for a personal loan.

A business loan is when an established business borrows a fixed amount of money for their appropriate business needs from a lender that they agree to pay back in instalments over a specific amount of time. It is a lot like a personal loan however the eligibility terms are different.

There are many different types of business loans. Small business loans are specific for small businesses, less than 100 employees. Specifically, business loans in Canada for small businesses can range from a few thousand dollars to even millions with the right application.

Usually, business loans are used for a specific reason whether it be inventory needs, relocation cost, or opening a second location. Business loans are normally not obtained just to have. Though it may seem simple, borrow money, and pay it back, lets take a closer look into how a business loan works.

How do business loans work?

Business Loans work like a personal loan. A business owner or associate borrows money from a lender on behalf of the business. Then after a set period of time the business repays the loan with the accrued interest.

When a business applies for a business loan the lender will assess the businesses credit and repayment history. The lender needs to know if a business has already borrowed money and how well they have done to repay the previously borrowed amount. This is why financial credibility is important for a business.

When dealing with business finances and personal finances it is important to keep them separate. Mixed personal and business finances can lead to mistakes and the financial credibility of the business can go do. Then the business would be unable to get a business loan when they need it.

Stay organized, stay accountable, and build a credible business.   

What are the types of business loans?

The types of business loans are term loans, business lines of credit, startup business loans, working capital loan, merchant cash advance, invoice factoring, and more.

Term Loans

There are several types of business loans that can be applied for. There are term loans which is when a business receives a large amount of money all at once. Then once an agreed-upon amount of time has passed, usually between 6 to 18 months, the business repays the loan amount with interest.

A term loan is the most structures type of loan. Everything is fixed. There is a fixed interest rate, loan amount and repayment terms. Everything is written out and payment plans are to be strictly followed and paid on time.

A term loan can be a large portion of money that would be beneficial to the business. The cash is given to the business upfront and for anything they need to use it for. The process is quick and structured. A term loan can be obtained in person or online.

There are some disadvantages to a term loan. The business would need to be held responsible for the repayment by either having collateral or a personal guarantee. This can be risky for a business, they will lose everything if they fail to pay the loan back in time. It can be harder for a new business to be approved for a term loan. The interest rates vary the most with term loans as well.

A term loan is a great option for businesses that have been operational for a year or more and can commit to a fixed payment plan and loan terms.

Business Line of Credit

A common form of business loan is called a line of credit. This is when a business is approved for a sum of money, but they do not need to use it all right away. The loan balance is available month to month. The money can sit in the bank and when the business needs the money, they can take what they need from the approved amount. They only pay interest on the amount of funds they use rather than the for the whole loan.

This is a great option for some businesses because they do not need collateral to be approved. A business line of credit has the most flexible repayment plan. However, a business line of credit requires the business to have a large income and a high credit score to be approved. There can also be additional fees associated such as maintenance fees to keep it in the bank and possibly fees when the line of credit is used. Read the fine print and make sure all future fees associated are known and agreed upon.

Start Up Business Loans

There are also loans called start-up business loans. These loans are specifically for newer businesses. Rather than assessing the businesses credit and income, the loan is given out based on the person asking for the loan on behalf of the business. These loans are not great for established businesses because they come in smaller amounts and have higher interest rates. They are a great business loan option to help a business establish financial credibility as it grows.

Start up business loans are available for newer businesses to get their foot in the door. A business applying for a startup business loan should put together financial records, a list of investors and how much they invested, balance sheets and income forecasts. A lot of time the banks and lenders will consider five things when deciding to grant a business loan.

They will look for how much the entrepreneur has invested in the business. The will review the personal money the owner has put into the business. The more the business owner has tried to put in themselves the more the lenders will want to invest in the business as well.

Lenders will also look at the businesses plan to bring in income in the future. The funds the business brings in will be the funds used to repay the loan. If the business model does not generate revenue, the business will not gain the loan.

One of the most important factors a business will look at when deciding to grant a start-up business loan is the collateral the business can offer. If the business fails to repay the loan the lender will sell off the business assets as repayment. The more assets a business has to use as collateral the more likely the business it to be granted the loan.

Finally, the lender will consider the current economic status. Political events, economic mood will play a part in the business loan agreement. If the economy is declining and the business model will not survive the economic change then lender will not invest in the company. Be aware of the happenings in the world and make sure they do not play to the business’s weaknesses.

Working Capital Loan

The best business loan in Canada for day-to-day expenses is called a working capital loan. With this loan a business is able to borrow an agreed-upon sum of money for a short period of time before paying it back. Seasonal businesses are most likely to take advantage of this loan to make up for the lack of money they make in the off-season that they can easily pay back when they are fully operational again.

Merchant Cash Advance

A merchant cash advance is an interesting way for a business to borrow money. A merchant cash advance is when a lender agrees to give money to a business in exchange for a cut of the daily credit card sales to pay it back. The payback period is dependent on the business’s income. This is one of the more riskier business loans and should only be considered by businesses that have plenty of sales or transactions that can pay back the loan more quickly.

Invoice Factoring

Similar to merchant cash advance is called invoice factoring. This is when a business sells a fraction of the sales, they believe they will make in the future to secure a loan today. This is seen most frequently in staffing companies, businesses that receive their payment once they find a hire that stays with the new employer for at least a month.

This is a great loan option for businesses that know they will make money in the future but need the help getting there. These loans are easily approved and provide the business with quick cash. This is a risky loan for newer businesses. A newer business can find this loan option to cause issues with unwanted debt and is one of the most expensive ways to get financing. A more established business would benefit better from this loan type.

Micro-Niche Loans

There are also business loans that can be specific to an industry. These are called micro-niche loans and are only given to businesses that meet certain requirements of the industry they are in. These loans are very flexible and tailored to the business’s specific needs. That specific need could be a restaurant installing new kitchen equipment, or a car garage upgrading their tools. A lot of the time the business will put something they have up for collateral to acquire the loan, such as the equipment that is being purchased.

Collateral is actually another way a business can receive a loan. Real estate, heavy equipment, or machinery are examples of what a business could use as collateral. Loans like this are some of the largest, they can borrow millions of dollars depending on the assets a business has. On top of being some of the larger loans these collateral loans also have some of the lowest interest rates.

It is important for a business to choose the right kind of loan to best suit their needs. Keeping a business financially credibly can be hard and securing a loan a business cannot pay back can be devastating.

How to choose what business loan is right for you

When choosing a business loan there are several things a business should keep in mind. First, a business should try and secure the lowest interest rate possible.

There are some companies out there that charge a large interest rate which means the business is paying back a lot more than they borrowed. A 25% interest rate is quite high while a 7.9% interest rate is more reasonable. However, newer businesses can expect to pay higher interest rates because they have not yet established any financial credibility. Shop around and find the lowest interest rate possible.

Second a business should watch out for application fees. Some companies charge a fee just to apply for the loan. Paying for the application does not guarantee that the business loan will be approved. If a business is shopping around for the best interest rates they should not spend hundreds of dollars on the application process. Also watch for other administrative fees such as fees for early repayment of the loan, or late payment fees. Be cautious and do not spend extra money where it is unnecessary.

Another thing to look for are the repayment terms. The terms of repayment are going to be different from lender to lender. The payments can be daily, weekly, biweekly, or monthly. Make sure the business will be able to handle the payments easily so the financial credibility of the business will grow. It is also important to note that the more time it takes to pay the loan back the more interest will need to be paid.

Consider the loan size and the reputation of the lender. Do not borrow more money than the business needs. This can lead to large interest rates, and longer repayment periods which will hinder the financial credibility of the business. Check the accreditation of the lender. The Canadian Lenders Association and the Better Business Bureau are good sources for accreditation. Borrowing from a nonaccredited lender can lead to detrimental mistakes, invalid contracts, and possibly the loss of the business. Be aware and go to a credible source.

Business loans are a great way for a business to grow and prosper. Once a lender is chosen that checks all the boxes of a great lender and a great loan, a business can take a big step closer to success.

Conclusion

There are some great business loans offered in Canada. Lending Loop, Loans Canada, SharpShooter Funding, Capitol Company, and OnDeck are five of the best business loan lenders in Canada. They offer comparison charts, simple applications, reasonable interest rates, and flexible repayment plans. Also, all these accredited sources are the best way a business can get the financial backing they need to be the most successful.

A business loan is similar to a personal loan; however, the eligibility requirements are different. While every lender has different eligibility requirements most lenders request the business has been in operation at least one year and have had successful income results. Business loans can take longer to be approved and tend to have higher interest rates than personal loans. A typical business loan will be applied for, approved, and paid back within a set amount of time. It is the best way for a business to build financial credibility to be successful in the future.

Several types of business loans give business options to choose from. Each business model is going to have different needs and the differing types of loans helps them meet those needs. A business line of credit, start-up business loans, working capital loans, merchant cash advances, invoice factoring, and micro-niche loans are some of the types of loans that can fit a business’s needs.

Some business loan lenders will want to see a strong sale, and long operational history. Others are more relaxed and able to help businesses without having to have such strict requirements. The most important thing to think about when considering a business loan is to make sure the loan will propel the business forward with positive growth. The business needs to be able to pay the loan amount and the interest rate set within the repayment terms.

Failing to do so can cripple a prominent business. Research the best options, compare several loans and lenders before choosing, and watch the interest rates, fees, and terms to make sure they are the perfect fit. A business that can establish good credit will be able to borrow more and more with better loan terms. Business loans are a great way to help a business be successful.

FAQs about
Business Loans

Have a different question? Contact us today.

How do I qualify for a business loan?

To qualify for a business loan, you’ll want to have a business that can sustain its operations and profit for the foreseeable future.

This lets lenders know that you’ll have the capital to pay back your business loan.

What is a good business loan rate?

Business loans in Canada usually have an average interest rate of 3% to 7%. This does vary from lender to lender and will depend on your business type.

What affects business loan rates in Canada?

Business loan rates are based on the type of business you operate, your business’ capacity for growth and the collateral needed to scale your business.

Your lender will use these factors to assess your business’ ability to repay the loan easily.

What are typical business loan terms?

Most business loans will have a term of 1 – 10 years. This means that you’ll have a specified in window of time to pay back the loan as set by your business loan agreement.

What can you do to save on business loans in Canada?

You are already taking the first steps to saving on business loans. When you apply with Comparewise, we automatically match you with the best deal for your situation.

What should I look for in a good business loan deal?

Before agreeing to a business loan you need to consider your business’ ability to pay off the loan. Consider the loan amount and repayment term (how long you get to repay your loan) and see if it is realistic for how your business has been growing. You’ll also want to consider the interest rates, fees, and collateral requirements set out by the lender.

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