Getting a business loan in Canada takes more than filling out a form. The lender on the other side is trying to answer one question: can this business repay what it borrows? Whether you are walking into a bank branch or applying online with an alternative lender, that question drives everything they look at.
The good news is that Canadian business owners have more options than ever. Banks are the most familiar route, but they are far from the only one. The Business Development Bank of Canada offers government-backed financing for certain types of businesses. And alternative lenders, which read your bank statements and revenue history instead of leading with your credit score, have opened up funding to thousands of businesses that big banks would have turned away.
This guide covers what you actually need to know before you apply, what lenders look at, and how to put your best application forward.
What types of business loans are available in Canada
The first step is knowing which type of financing fits your situation. Not every product is right for every business, and choosing the wrong one costs you time.
Business term loan
A lump sum you repay in fixed instalments over a set period. Good for one-time investments: equipment, renovations, expansion. Banks offer these with the most competitive rates, but you need strong credit and at least two years of financials. Alternative lenders move faster and look at cash flow, not just credit score.
Merchant cash advance
Not technically a loan. A lender advances you a sum upfront and recoups it as a percentage of your daily card and deposit volume. Factor rates apply instead of interest rates. Good for businesses with consistent card revenue that need cash quickly. Approval is typically based on deposit history, not credit score alone.
Business line of credit
A revolving facility you draw from as needed and repay as you go. Useful for seasonal businesses or anyone managing unpredictable cash flow gaps. Interest is only charged on what you draw.
Invoice factoring
You sell outstanding invoices to a lender at a discount and receive the cash immediately rather than waiting 30 to 90 days. Good for B2B businesses with slow-paying customers and a healthy receivables book.
Equipment financing
The equipment itself serves as collateral, which makes approvals easier. You use the loan to buy the asset, and the asset secures the loan. Common for contractors, restaurants, and manufacturers. The right product depends on why you need the money, how quickly you need it, and what your business looks like on paper. See Solid Capital's business financing options for a full breakdown of what is available.
What lenders look at when you apply
Canadian lenders, whether bank or alternative, are reading your application for the same signals. They just weigh them differently.
Credit score
Banks treat a personal credit score below 650 as a serious obstacle. Alternative lenders use it as context, not a verdict. A business with 12 months of consistent deposit history and a credit score of 580 has a real shot at financing through an alternative lender.
Revenue and cash flow
Three to six months of bank statements show what is actually happening in the business. Lenders look at average monthly deposits, consistency of inflows, and whether the account regularly runs near zero. A $20,000 average monthly deposit with steady weekly inflows tells a cleaner story than one $60,000 deposit every quarter.
Time in business
Most lenders want to see at least six months of operating history. Some require twelve. This is about risk: a business that has survived a full year has proven something. Alternative lenders are generally more flexible here than banks.
Collateral
Banks often require collateral for larger loans. Alternative lenders typically do not, which is one reason their rates are higher. If you are applying for equipment financing, the asset itself is collateral. For working capital loans, the lender is taking on more risk. The Financial Consumer Agency of Canada recommends comparing multiple lenders before committing to any financing product.
How to prepare a strong application
A complete, well-prepared application gets reviewed faster and approved more often. These are the things worth having ready before you apply.
Three to six months of bank statements
This is the core document for most alternative lenders. Download them directly from your bank's portal as complete PDFs, not screenshots. Make sure every page is there. Lenders notice when pages are missing. For a detailed walkthrough, see our guide on how to prepare your bank statements for a business loan application.
Government-issued ID
Your personal identification is required. If you have business partners with ownership stakes above 20%, their ID may be required too.
Proof of business registration
A business number, certificate of incorporation, or trade name registration confirms the business is legitimate and operating legally in Canada.
Basic business details
Revenue figures, time in business, industry, and what the financing will be used for. Alternative lenders often ask for this in a short online form. The Solid Capital application takes about five minutes, with no impact to your credit to apply.
How to choose between a bank and an alternative lender
Most Canadian business owners start with their bank. That makes sense: familiar, relationship-based, and often cheaper if you qualify. But the approval process is slower and the criteria are stricter.
If any of these apply to your situation, an alternative lender is likely a better fit than a bank:
- Your credit score is below 650
- You have been in business for less than two years
- You are self-employed and your income does not appear cleanly on paper
- You need the money within days, not weeks
- You have been declined by a bank already
Honestly, if your business has been generating revenue for six months or more and you can show it in your bank statements, you should not assume a bank decline is your final answer. That is a credit-file problem. It is not a business-health problem.
Solid Capital is a Canadian alternative lender that reads the full picture: bank statements, revenue history, business context. Not just a credit score. Start your application at solidcapital.ca. Five minutes, no impact to your credit, and a Canadian advisor reviews every file personally. For approved files, funding arrives in as little as 24 hours.
Frequently Asked Questions
What credit score do I need to get a business loan in Canada?
It depends on the type of lender. Major banks typically want a personal credit score of 650 or above. Alternative lenders use credit score as one input among many and will often approve businesses with scores below that threshold if the bank statement history and revenue are strong.
How long does it take to get approved for a business loan in Canada?
Bank approvals can take weeks to months. Alternative lenders typically make decisions within 24 to 48 hours of receiving a complete application. For approved files, funding can arrive within 24 hours of signing.
Can I get a business loan in Canada if I am self-employed?
Yes. Alternative lenders are well-suited to self-employed applicants because they assess bank statements and revenue rather than relying on traditional employment income verification. You will generally need three to six months of business bank statements and proof of business registration.
What is the minimum time in business required for a business loan?
Most lenders want at least six months of operating history. Some alternative lenders will consider three months for the right applicant. Banks typically require two or more years.
Do I need collateral to get a business loan in Canada?
Not always. Equipment financing uses the asset as collateral. Most alternative business loans, including merchant cash advances and working capital loans, are unsecured. You do not need to put up property or equipment to apply.
Can I get a business loan with bad credit in Canada?
Yes, through alternative lenders. A low credit score matters less when your business has consistent monthly revenue and a clean bank statement history. Alternative underwriting reads your business as it is today, not just what your credit file says about the past.
