What are Ontario's best business loan offers in 2024?

Following covid, business loan interest rates in Ontario have been steadily declining, following trends from across the country. Have you been playing with the idea of commercial financing for your Ontario business? It's a great time to dip your toes in! Taking out a business loan is a big consideration, especially if it is your first time. We're here to help make the process easier.

This guide will cover everything you need to know, including key questions such as: "How to get a business loan in Ontario?" and even "Are there different types of business loans in Ontario?" Our experts are here to help.

Top 3 best business loan offers in Ontario

Smarter Loans, get the financing you need in just a few days

Are you a business owner in Ontario who needs funding? Smarter Loans are here to help! As a leading online lender, they are renowned for offering hassle-free commercial financing options. They boast a streamlined application process and give you access to a multitude of rates and policies. Are you looking for some quick options? You can receive the financing you require in only a few days. Their well-informed agents are ready to help you find the ideal loan for your business needs.

Here is why we like Smarter Loans:

• Diverse Selection of Loan Options
• Straightforward Application Process
• Excellent Customer Service

Loans Canada, a wide range of loan options

Uncovering trustworthy lenders can feel like a menacing task when growing your business in Ontario. Loans Canada is here to help. With a tried-and-true track record, you can rest easy knowing you are working with one of the most reputable Ontario's business lenders. Their knowledgeable representatives will help connect you with the best rates and terms tailored to suit your needs. You'll love the streamlined application process and their comprehensive, customer-focused approach to commercial lending. You'll be in good hands every step of the way.

Here is why we like Loans Canada:

• Diverse Selection of Loan Options
• Straightforward Application Process
• Excellent Customer Service

LoanConnect, get a loan easily through their online process

LoanConnect is a game-changer for connecting Ontario business owners with the perfect loan. Their user-friendly platform makes it painless to use, while their no-fuss approach often sets them apart from others in the market. LoanConnect makes it easy to secure an Ontario business loan quickly and within as little as a few days. Whether you're asking more questions on how to get a business loan in Ontario or how interest rates work - their customer service will have the answers!

• Straightforward Application Process
• High credit score required
• Get online support from beginning to end

How do business loans work in Ontario?

The overarching way business loans work in the province isn't too different from the rest of Canada. While the general principles are the same, there are multiple places to borrow from, different types of loans to apply for, and even two kinds of interest you may be charged. Understanding how it works is impactful in ensuring you are set up for the most success.

Concept of Ontario Business Loans: Whether your business loan is for business growth, repairs, or new equipment, business owners like yourself can apply to their preferred lender for usually more significant amounts of money. Each lender will have different conditions for borrowing money, but all lenders will charge you interest on the money for a pre-set amount of time (called the term).

You will be issued a contractual agreement with all the stipulations before officially being given any business loan in Ontario. You can expect a repayment schedule of either bi-weekly or monthly installments.

Types of business loan interests in Ontario

It's essential to understand the types of interest you might encounter when looking into an Ontario business loan:

• Fixed: The most predictable and best for budgeting. Your interest rate will be consistent every month for the entire length of the business loan. While you may benefit from knowing your exact payment each month, if there are any drops in the market, your interest rate will not move.

• Variable: Based on market rates, the interest on your bill will fluctuate. You may benefit if there is a decline in the market, though this isn't a certainty. Your monthly payment will be slightly different each month, risking difficulty with budgeting.

Types of business lenders in Ontario

The type of lender you decide to work with can also impact your interest rate, repayment terms, and your eligibility. Knowing the difference will give you confidence that you are signing up for the right Ontario business loan:

• Banks & Credit Unions: When you think of loans, you typically think of a bank. They are one of the most trusted lending establishments. The criteria and process can be more stringent than other lenders. If you have good credit and an established business, you're likely to get great interest rates, larger loan payouts, and full-service banking options.

• Online Lenders: Streamlining the process with fewer in-house expenses often means they can pass the savings on to you. Many online lenders have excellent reputations and can be fantastic allies for smaller business owners or those with lower credit scores. Online lenders tend to be more lenient with the approval requirements and can issue loans within a few business days.

• Alternative Lenders: Understanding the challenges of running a business, alternative lenders are one of the most flexible in the market. You'll love the more tailored feel of your loan experience and the relatively easy application process.

• Private Investors: Want a service that cares about your business's success as if it were their own? Not only can private investors be a flexible solution, but it's not uncommon to receive personalized business advice from other successful entrepreneurs.

While things may feel 'standard' while looking into a business loan in Ontario, no two loans are the same. The amount of money, the interest percentage, and the term you qualify for will depend on:

• Your credit score.
• How long your business has been operating.
• How successful your business is.
• The purpose of your loan.
• Your debt-to-income ratio.

Do you have everything you need? Most lenders will need to review some documentation before they can offer funding. You can anticipate needing to provide:

• ID and proof you own the business Financial Statements
• Business Plans
• Financial Statements
• Tax Returns (typically for the last three years if applicable)

Are there different types of business loans in Canada?

There are many types of Ontario business loans. Not only will it depend on if you are an established business or just starting, but just like personal loans, there are business loans better suited to specific situations. Taking out the right type of loan will help make sure you aren't getting into more debt than necessary.

Startup Business loan in Ontario

If you have low credit or have been in business for less than two years, lenders will consider you for a start-up business loan in Ontario. The approval criteria are typically easier than other loan types, though the interest rates are often higher, or the loan payout is not quite as high. While it may initially feel like a downfall, it's an option that has helped Ontario entrepreneurs build stronger credit scores to qualify for more loan options later.

Established Business loan in Ontario

Have you been in business for years? Do you have good credit? If the answers are yes, lenders will be considering you for an established business loan in Ontario. This typically works in your favour as lending funds to you is deemed to have less risk of default. You'll often benefit from lower interest rates or more favourable terms.

Types of Business Financing in Ontario

There are further types of business loans you will want to cross-examine, many of them standard across Canada. Finding the loan type best fit for your business situation couldn't be easier than comparing the pros and cons in our expert-built table below.

Loan Type	Pros	Cons	Use case
Term Loans	Fixed payment and interest rates Long repayment term Large loan amounts	Difficult to qualify for Longer application process Often requires collateral	Equipment purchase Business expansions Long term projects
Lines of Credit	Flexibility to withdraw funds when you need Only pay interest on the money you use Variable interest can be cheaper	Difficult budgeting the variable interest Can be tempting to overspend Credit limit may be smaller than other loans	Seasonal fluctuations in income & expenses Emergency funds Business expansions
Invoice Financing	Fast approval process No waiting for customers to pay invoices Often no collateral required	Higher fees than other loan types Perception of the business having hardships Limited to revenue generated by outstanding invoices	Any purpose, the loan is to cover the cash flow of businesses with outstanding invoices.
Equipment Financing	The equipment itself is collateral The interest may be tax deductible Aids in keeping cash flow open	Higher fees than other loan types Risk of negative equity Repossession of equipment if payments default	Purchase brand new equipment Replace old equipment Business expansion
Merchant Cash Advances	Fast approval process Often no collateral required Easy repayment, comes from a percentage of daily credit card sales	Higher fees than other loan types Credit limit may be smaller than other loans If low or no sales, repayment is difficult	Emergency funds such as Seasonal fluctuations in income & expenses Poor credit or no collateral

What are the business loan interest rates in Ontario?

We would love to tell you a standard interest rate, but Ontario Business loan interest rates fluctuate. You may find promotional rates as low as 2.99% or loan rates that are nearly 50% interest. Using comparison tools like ours will give you critical comparisons that allow you to feel confident you have got the best rate for your Ontario business loan.

Commonly, your rates will be dependent on:

• the lenders
• the type of loan
• your credit score
• your business health
• if the loan is secured by equity

How large of a business loan is available in Ontario?

Much like the interest rates for business loans in Ontario, the amount lenders pay out is tailored to your business's situation. Lenders commonly factor in:

• Credit scores (personal and business)
• The debt-to-income ratio
• Your industry and why you need the funds
• If you have collateral to secure the loan
• Type of loan
• How long you've been in business.

You should avoid applying for more funds than you actually need, which can be tempting to open cash flow. It can impact your debt-to-income ratios over the term of the loan and result in paying out more money than necessary in interest fees.

How do I get a loan in Ontario?

Now that you know more about how business loans work in Ontario, we have mapped out the process from beginning to end so you can confidently move forward with your commercial goals.

1. Use an online credit service to check your credit score. These services don't do a hard check like a loan application will. Hard credit checks temporarily impact your credit score negatively. Knowing how healthy your score is can dictate if it is best to wait and build your score up or work with a traditional or less-strict lender.
2. Identify the purpose of the loan and how much you will need. If you are having cash flow challenges, this can be a challenge, but the extra work. Most lenders will need to know why you're borrowing the funds, but it will also dictate which loan type is a good fit.
3. Settle on what type of loan type and from which type of lender is best suited to your business goals and financial health. Using our comparison tool and business loan calculator ensures you get the best Ontario business loan and that the repayment installations are affordable.
4. Organize your documents for your application. You will want your financial statements, sales and marketing plans, and as many tax returns as possible.
5. Complete your preferred lender's business loan application. Provide all of the documents you prepared, along with basic information about you and your business.
6. Wait to hear from your lender regarding the final decision. Different lenders will have varying approval times. Typically underwriting can take a few days to a few weeks. Online and Alternative lenders are well-known for fast business loan approvals.
7. Have you been approved? Be sure to review the fine print before signing your loan agreement. Once you have signed, it is official, and the lender will organize the money delivery to you.
8. Stay in good standing with your lender by making timely payments for the full duration of your loan. Failing to do this risks repossession of collateral, damage to your credit score, and additional fees.

Can I get a business loan with bad credit in Ontario?

With all this talk of needing good credit health, it's imperative to say you still have options for a business loan in Ontario if you have bad credit! While there isn't a set credit score in Canada that determines if you will or won't get approved for a business loan, you will find the most success with the less traditional lenders:

• Alternative lenders: Non-bank lenders may have more flexible lending criteria than traditional banks. They may be willing to work with businesses with bad credit, although interest rates and fees may be higher.

• Equipment loans: Since the loan is backed by collateral, lenders may be more willing to work with businesses with bad credit.

• Invoice financing: Allows businesses to get an advance on outstanding invoices. Since the value of the invoices secures the loan, lenders may be more willing to work with companies with bad credit.

If you know you have a low credit score, it may be worthwhile to wait and work on repaying your debts before accumulating a higher debt-to-income ratio that can further negatively impact your financial health.