What are the different types of business loans to consider?

The primary business loans available in Canada are term business loan, business line of credit, merchant cash advance, commercial mortgage, and asset-based loan.

  • Term Business loan – A fixed sum is given to the business. Repayments are made over an agreed period with a fixed interest rate.
  • Business Line of Credit – Access is granted to revolving credit, like a credit card. The business draws funds as needed and pays in monthly installments.
  • Merchant Cash Advance – A business borrows money against proof of upcoming sales until they receive payment from their customers.
  • Commercial Mortgage – This kind of loan is used specifically for purchasing property. As with a home loan, the business can pay off the loan over a long period. In this case, the property is used as collateral. 
  • Asset-Based Loan – The assets of the business are used as collateral. These loans could involve large payouts and lower interest rates.

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