Where to Get Small Business Loans in Canada

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Getting a small business loan can be a tough job for a small business. Canadian banks are traditionally conservative, and start-up ventures are notoriously risky, says Dianne Buckner, former host of CBC's Dragons' Den. After all, she says, "Banks aren't supposed to be giving away money ... it's mostly true that only if you can prove you don't need the money will they give it to you."

But traditional banks aren't the only places to get small business loans. If your small business is looking for money, here are 10 other Canadian small-business loan sources where you may be able to get the funding you need.

Canada Small Business Financing Program

Established to help new businesses get started and exisiting firms make improvements and expand, this small business loan program provides up to $1 million for any one business. Businesses with gross annual revenues of $10 million or less can apply to this program at any bank, caisse populaire, or credit union in Canada.

BDC Xpansion Loan

If your business qualifies, you can get up to $100,000 in long-term financing to do things such as participate in trade shows, develop e-commerce, create and implement a marketing plan, obtaining certifications, and more. And just to make it even sweeter, Business Development Bank of Canada (BDC) can re-advance any repaid portion of the loan starting at a minimum of $10,000.

BDC Startup Financing Program

This program is designed to help small businesses in the startup or early growth phase (the first 12 months of sales) that "can demonstrate realistic market and sales potential." Such a business may be eligible for a small business loan of up to $100,000, which may be used for working capital, marketing and startup expenses, fixed assets, or buying a franchise.

Microloans

Some financial institutions offer small business loans of up to $15,000 earmarked for people who would have difficulty getting a traditional business loan. For instance, Western Economic Diversification Canada offers a microloan program to provide small business loans to small businesses throughout western Canada. Ask your credit union or caisse populaire if they have such a small business loan program.

Community Loan Funds

Community Investment Funds are nonprofit organizations dedicated to helping people who can't get the loans they need from traditional lending institutions. Depending on the particular loan fund, you may be able to get a small business loan from $2,000 up to $150,000.

Women's Enterprise/Resource Centres

Many of the organizations that work to help women succeed in business offer small business loans and even some grants. If your business is at least 50% female-owned, there may be several options open to you.

Aboriginal Business Canada

Even better than a small business loan, this program offers nonrepayable contributions (aka small business grants) of up to $99,999 for eligible individual entrepreneurs. You must be of Aboriginal heritage and have a viable business opportunity to apply. The money may be used for a startup as well as expanding or marketing your small business.

Small Business Loans for Young Entrepreneurs

If you are an entrepreneur (or hopeful entrepreneur) between the ages of 18 and 39, there are several special small business loan programs that may benefit you. Futurpreneur Canada offers several different financing programs to support entrepreneurs aged 18 to 39, including one that provides startup small business loans of up to $60,000. There are a number of regionally based programs as well.

Angel Investor Networks

Angel investors are individuals that look to fund small businesses that they consider to be good investments. Typically, angel investors look for higher returns than provided by the stock market and want to take an active role in the business. If you can handle these two things, an angel investor can be a great small business loan source.

Friends and Family

Sometimes the money you need to fund your startup or grow your business is much closer to home than a traditional bank. Friends and family are second only to your own pocketbook for business financing, so don't neglect this important network.

Be Prepared

While all of these small business loan sources have different eligibility requirements, they share one thing in common: They all expect you to have a viable business idea, and that means having a solid business plan on paper. You also need to prepare yourself to present your business plan and make the case for funding your small business, whether through a formal application process, in person, or both.

Go in prepared, and give yourself the best shot at earning one of these small business loans.

Article Sources

  1. The Hamilton Spectator. "Dragons’ Den host speaks at Salute to Small Business event," Accessed Jan. 2, 2020.