What a term loan is, and isn't
A term loan gives you the full amount up front and a fixed repayment schedule. That makes it the right tool for a defined project with a clear payoff. It's the wrong tool for uneven cash flow, which a business line of credit handles better, and usually not the cheapest way to buy a specific machine or vehicle, where equipment financing lets the asset secure the loan.
Where Canadian businesses borrow
- Banks. Often the lowest rates, but they lend inside narrow boxes: two or more years of financial statements, strong profit relative to the payment, and often collateral. If you don't fit, the answer is no. Here's what to do when the bank says no.
- Credit unions. Sometimes more flexible than the big banks, especially for local businesses with a long relationship.
- BDC. The federal development bank, which lends to businesses in most industries.
- Government-backed bank loans. The Canada Small Business Financing Program helps banks lend for equipment, leaseholds and property.
- Alternative lenders. Decide mostly from your recent bank statements, so a strong current year can outweigh a weak last year-end. Here's what they look for.
How much can you borrow?
Lenders size a loan from what your business can comfortably repay, not from what you ask for. They look at average monthly deposits, the payments you already make, and how a new payment fits on top. Our guide on how lenders size a loan breaks down what grows and shrinks the number.
What you'll need
To start with Straightline, nothing but a few answers. To get real offers, most lenders want your last 3 to 6 months of business bank statements, basic ownership details and what the funds are for. Larger loans add financial statements and tax filings. See the full business loan document checklist. If you owe CRA, deal with it first, because it's one of the most common reasons good files stall.
What it costs
Rates vary widely with the lender, your file and the term, which is why comparing offers matters. Compare the total cost in dollars and the payment schedule, not just the headline rate. In Canada, most loans can't carry an annual percentage rate above 35%. Commercial loans between $10,000 and $500,000 can go up to 48% APR, and commercial loans above $500,000 aren't subject to the cap.
Replacing cash advances with one loan
If daily or weekly debits from one or more cash advances are eating your margin, a longer-term loan that pays them off can cut your payment and stop the cycle. Here's how to work out what your advances really cost.
One advisor instead of five applications
Filling out every loan form online usually means your application gets sold to several companies and your phone rings all week. With Straightline, your file goes to one experienced advisor who compares offers from many lenders and brings you the ones that fit. Check your options in about 3 minutes, with no credit check to start.