Rates, Costs and 2026 Rules
How Canadian lenders price small business loans, what the fees really add, and the federal rules that apply in 2026.
small business loan requirements and rates Canada
Small business loans in Canada, priced and checked before you sign
The rate on a term sheet is only part of what a business loan costs. These guides show how Canadian lenders set rates and conditions, what the federal rules say in 2026, and how to compare offers with the arithmetic shown.
- See what lenders look at: cash flow, debt service coverage, collateral and personal guarantees
- Use the payment, fee, refinancing and application checklist tools
- Check the rules with ISED, BDC, the Interest Act, the Criminal Code and OBSI
Explore by topic
Worked Examples and Checklists
Step-by-step calculations for payments, coverage ratios, leases and competing offers, plus the documents to prepare.
Mistakes, Problems and Official Sources
Costly borrowing mistakes, what happens when a loan goes wrong, Quebec differences and where to check the facts.
Start here
Worked Examples and Checklists
Business loan application checklist for Canada: documents, numbers and offer checks
The documents a Canadian bank, credit union or BDC will ask for, the numbers to work out before you apply, and what to check in the offer before you sign.
Mistakes, Problems and Official Sources
Business loan mistakes Canadian owners make, and how to avoid them
The most expensive mistakes in Canadian small business borrowing, from unlimited guarantees and demand clauses to mismatched terms and factor-rate advances, with fixes for each.
Rates, Costs and 2026 Rules
CEBA loan repayment: the 31 December 2026 deadline and your options
What is still owed on a Canada Emergency Business Account loan in late 2026, how the 5% term loan works, the arithmetic of repaying, and how to refinance or ask for help.
Worked Examples and Checklists
How to compare two business loan offers in Canada: a term sheet side by side
A worked comparison of two Canadian business loan offers with different rates, fees, prepayment terms and guarantees, showing total cost over the full term and if repaid early.
Rates, Costs and 2026 Rules
Canada Small Business Financing Program (CSBFP): limits, rate caps and fees in 2026
How the federal CSBFP works in 2026, who qualifies, loan limits, the prime plus 3% rate cap, the 2% registration fee, security rules and a worked example.
Rates, Costs and 2026 Rules
Small business loan requirements and rates in Canada: how lenders decide in 2026
What Canadian lenders require for a small business loan, how rates and spreads are set, what fees add, and which federal rules apply in 2026.
Tools
Business Term Loan Payment Calculator
Estimate the blended monthly payment, total interest and total cost of a business term loan, including upfront fees.
Fixed-Principal Business Loan Calculator
See the first and last monthly payment and the total interest when a loan is repaid in equal principal instalments plus interest.
Business Loan Fee and Net Proceeds Calculator
Work out what percentage fees plus fixed charges cost on a business loan, and how much cash reaches your account if they are deducted.
Business Loan Refinancing Calculator
Compare your current business loan payment with a refinanced one, and see how long it takes to recover the penalty and fees.
Small Business Loan Application Checklist
Tick off the documents, numbers and contract checks a Canadian lender will want, before and after you receive an offer.
Small business financing options in Canada compared
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Bank or credit union term loan | Lump sum repaid over a set amortization, fixed or floating (prime plus a spread), usually secured | Equipment, renovations, buying a business, refinancing | Covenants, personal guarantees, prepayment penalties on fixed rates |
| Operating line of credit | Revolving limit for working capital; interest on the balance used, often prime plus a spread | Seasonal gaps, receivables, inventory | Usually repayable on demand; margining against receivables and inventory; standby or renewal fees |
| CSBFP loan (Canada Small Business Financing Program) | Loan from a participating lender, partly guaranteed by the federal government; rate caps and a 2% registration fee | Businesses with $10 million or less in gross revenue that lack enough security for a conventional loan | Registration fee; not for share purchases or farming; lender still decides |
| BDC term loan | Loan from the federal Crown corporation, often with flexible repayment such as fixed principal or seasonal payments | Growth, purchase of a business, working capital when banks offer less | Rates can be higher than a fully secured bank loan; check fees and prepayment terms |
Frequently asked questions
What do Canadian lenders require for a small business loan?
Most lenders look at cash flow first: two to three years of financial statements, recent bank statements, tax filings that are up to date, and a forecast showing the business can carry the new payment, usually measured by the debt service coverage ratio. They also check the owners' personal credit, ask for security over business assets and often a personal guarantee. See the application checklist.
How are small business loan rates set in Canada?
Floating rates are usually the lender's prime rate plus a spread, and fixed rates are based on the lender's cost of funds for the term plus a spread. The spread reflects risk: time in business, profitability, security, industry and the size of the loan. Fees and compounding also affect the true cost, so compare offers on total cost, not rate alone. See how prime-based pricing works.
What is the Canada Small Business Financing Program?
It is a federal program under the Canada Small Business Financing Act in which the government shares the risk of loans that participating banks, credit unions and caisses make to businesses with gross revenue of $10 million or less. You apply to the lender, not the government. Rates are capped (for floating term loans, prime plus 3%) and there is a 2% registration fee. See the CSBFP guide.
Does the 35% criminal interest rate apply to business loans?
Since 1 January 2025 the Criminal Code criminal rate is 35% APR. Under the Criminal Interest Rate Regulations, loans to a borrower who is not a natural person for business purposes are exempt from the 35% cap if they are over $10,000, but loans over $10,000 up to $500,000 must still not exceed 48% APR; loans over $500,000 are not capped. Loans of $10,000 or less, and loans to individuals, remain under 35%. See the criminal rate guide.
Will I have to sign a personal guarantee?
For most small businesses, yes: lenders usually ask the owners to guarantee a corporation's debts, sometimes limited to an amount and sometimes unlimited. Read whether it covers one loan or all present and future debts, and get independent legal advice before signing. See collateral and personal guarantees.
When is the CEBA loan due?
Balances on Canada Emergency Business Account loans that were not repaid by the forgiveness deadline in early 2024 became term loans at 5% interest a year, with full repayment due by 31 December 2026. Check with the financial institution that holds your CEBA loan. See the CEBA repayment guide.
Where can I complain about my bank's handling of a business loan?
Use the bank's internal complaint process first and ask for a final written response. Since 1 November 2024 the Ombudsman for Banking Services and Investments (OBSI) is the single external complaints body for federally regulated banks, and it accepts complaints from small businesses. Credit unions and caisses have provincial routes. See the complaints guide.
How this site is made
Term Sheet North is an independent information project. Guides are drafted with the help of AI writing tools and checked against official and primary sources before publication; see our Editorial Policy. We are not affiliated with any provider mentioned on the site and do not sell products or services.