Small business financing options in Canada compared
Term loans, lines of credit, government-backed loans, leases and alternatives compared on how they work and what to watch out for.
This table compares types of business financing available to Canadian small businesses. It does not rank lenders or show real rates, because pricing depends on your financial results, security, industry and the lender. Use it to decide which product fits the use of funds, then compare written offers with the payment calculator and the fee calculator. Select a column header to sort, or filter by keyword.
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| 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 |
| Commercial mortgage | Loan secured by commercial real estate, longer amortization | Buying or refinancing the building you operate from | Appraisal and environmental costs; renewal risk at the end of the term |
| Equipment lease | Lessor owns the equipment; you pay monthly, with a buyout or return at the end | Vehicles, machinery and technology that lose value | Implied rate is not always shown; end-of-lease and early termination charges |
| Invoice factoring | A factor buys or advances against your receivables for a discount fee | Businesses with slow-paying commercial customers | Fees per 30 days add up to high annual costs; recourse if customers do not pay |
| Merchant cash advance | Lump sum repaid from a share of future card or bank deposits | Very short-term needs when other credit is refused | Cost often stated as a factor rate; annualized cost can be very high |
| Business credit card | Revolving unsecured credit with a monthly statement | Small purchases and short-term float | High rates on balances carried; usually a personal guarantee |
| Futurpreneur start-up loan | Collateral-free start-up loan with mentorship for founders aged 18–39, paired with BDC financing | New businesses with limited history | Eligibility and amounts change; check the program's own site |
Product terms change often. Rate caps, fees and eligibility for the CSBFP are set by regulation and published by Innovation, Science and Economic Development Canada; check ISED before relying on any figure here. For BDC and Futurpreneur, read the current terms at BDC and Futurpreneur Canada. The Criminal Code criminal rate (35% APR since 1 January 2025, with commercial exemptions) is published in the Justice Laws Website. In Quebec, security over movable property is a movable hypothec registered at the RDPRM, not a PPSA registration.