Discover Your Options: Small Business Loans

Canadian businesses seeking out a small business loan must fully grasp the gravity of this process.

You must align with financial institutions offering rates and payment amounts you can afford. Otherwise, you might bite off more than you can chew.

Loans are a vital facet of a sound business plan. But these funds must be procured strategically, in a way that won’t damage your credit history or credit score. 

Moreover, you’re filling out a loan application because you require the cash flow to leverage an opportunity to bolster business growth. If you apply too soon (or too late), it could be detrimental to your company. 

See a small business loan as an investment in your organization’s future. You should find an option that offers the best possible return. Hopefully, the content below gives you further guidance on this process.

Get the Best Rates for a Small Business Loan

Before delving deep into this topic, it’s worth mentioning the Canada Small Business Financing Loan (CSBFL):

Your business can receive up to $100,000 – or $350,000 for equipment and leasehold improvements. It’s a government-sponsored loan program that you’d be wise to leverage.

A noteworthy talking point about the CSBFL is that the interest rate includes a 1.25% on-going administration fee.

This may stick in some small business owners’ crawls, as will the stringent requirements and criteria needed to be approved.

Fortunately, this isn’t your only option. A plethora of online lenders and lending platforms have made loans available for small businesses looking for an alternative—and they’re offering competitive rates.

Some of these platforms lend with APRs starting at 3%. This could be a tremendous boon for any small business with big dreams and a profitable business model. 

Benefits of a Small Business Loan

Generally, small business loans have terms between 3 and 10 years. This provides plenty of breathing room, so your organization can grow, instead of being hamstrung by demanding instalment payments.

Furthermore, small business loans usually have lower interest rates.

Combining the longer terms with attractive rates reduces the chances that you’ll default, drastically. Thus, making this option a low-risk, high-reward venture. 

On top of the above advantages, small business loans are for substantial amounts—allowing many new companies to hit the ground running.

Small Business Loans FAQ

The information below clarifies some frequently asked questions we receive about small business loans. 

What is a Small Business Loan? 

Small business loans in Canada are financial agreements between lenders and borrowers.

In short, these occur when a lender approves an application from a small business owner who needs funds to make hires and bolster their overall operations. 

How do I Get A Small Business Loan?

Suppose you’re applying through the Canada Small Business Financing Loan (CSBFL) program. In that case, you must follow specific steps for a viable application. For instance, perform your due diligence (research), find out if you’re eligible, figure out the maximum loan amount, and calculate the amount you need.

You must then figure out if you fall under one of the following loan classes (i.e., what the money is for):

• Real Property or Immovables
• Leasehold Improvements 
• Equipment
• Registration Fee

You can apply elsewhere while using the same methodology. 

As we’ve discussed, you can get a small business loan online. Find out the given process and requirements of each lending platform. 

Can you get a Small Business Loan with Bad Credit?

It’s entirely possible to receive a business loan if you have bad credit. However, it would be best if you put in some serious work to find an ideal lender who’ll approve you without raking you over the coals on interest. 

Loans for businesses with bad credit are a frequent occurrence. It happens when companies don’t have a credit score. Alternatively, it could happen if you’ve had some bad luck that reflects poorly in your company’s credit history.

Provided you are trying to procure an online small business loan with bad credit. Your lending platform will weigh your viability as a borrow based on these factors:

• Does your business have the potential for sustained growth?
• Have you improved upon your prior spotty history? 
• Is your credit score better than your company’s?
• What are your cash flow and revenue numbers?

How Much is a Small Business Loan?

Small business loan amounts tend to stop at around a $300,000 ceiling. 

Most reputable platforms begin between $4,000 – $5,000 for more minor expenses. Some even go as low as $500.

While a little bit of extra cash might give you a much-needed boost when times are tough, business loans should generally be more substantially sized.