What a BDC loan is
BDC lends its own capital — it is a Crown corporation, not a guarantee program like the CSBFP — through term loans for working capital, equipment, technology, real estate and business purchases, with terms that can run longer than the banks’ and repayment schedules that can be seasonal or deferred at the start. It also runs a small-business loan of up to $100,000 that is applied for online, startup financing for owners with experience and equity, and advisory services on strategy, operations and finance. It funds roughly 100,000 businesses and is meant to complement the banks rather than compete with them.
BDC loan requirements and rates
BDC looks for a viable business with revenue, a credible plan and an owner with relevant experience and reasonable credit — typically twelve to twenty-four months of operations, financial statements or projections that hold up, and personal credit around 600 or better. Rates are not published as a schedule but generally sit a few points above what a bank would charge a similar borrower, reflecting BDC’s higher risk appetite; the small-business loan carries a fixed rate set at application. Security is taken where available and personal guarantees are standard.
| Option | Minimums | Typical cost | Time to fund | Best for |
|---|---|---|---|---|
| BDC term or small-business loan | 1 – 2 years, plan, credit 600+ | A few points above bank rates | 2 – 4 weeks | Growth capital, equipment, technology, acquisitions |
| Online term loan | 6 – 24 months, $10,000+/month | 8 – 45 percent APR | 1 – 3 business days | Defined projects with a fixed payment |
| Business line of credit | 6 – 12 months, credit 600+ | 10 – 60 percent APR on the drawn balance | 1 – 3 business days | Recurring gaps, seasonal swings |
| Equipment financing | 6 months – 2 years, asset secures it | 7 – 30 percent APR | 2 – 5 business days | A specific machine or vehicle |
| Invoice factoring | B2B invoices, customers’ credit | 1 – 5 percent per 30 days | 1 – 3 days after setup | Waiting on 30 – 90-day terms |
| Merchant cash advance | 6 months, credit 500+ | Factor rate 1.15 – 1.49 | Same day to 2 days | A one-time gap on a thin file |
When BDC says no
BDC declines for the reasons banks do — too young, too little revenue, weak owner credit, an unconvincing plan, existing debt — and for its own: a business outside its mandate, a purpose it does not fund such as refinancing high-cost debt, or a request it cannot secure. A decline from BDC is not a decline from the market. Online lenders underwrite six to twelve months of deposits, equipment lenders underwrite the asset, factors underwrite the customers and advance providers underwrite the daily revenue, and each funds within a week for files BDC would not touch.
When BDC is too slow
BDC’s two-to-four-week process is fine for an expansion planned months ahead and useless for a supplier deposit due Friday. Many Canadian owners run the two in parallel: apply to BDC for the growth capital and take a line of credit or a working-capital loan for the gap, then repay the fast product from the BDC proceeds or keep the line as the working tool. Disclose the fast product to BDC — it will see the remittance in the statements — and keep the combined payments within the cash flow BDC is underwriting.
Prepare the file
What to have ready
- Twelve to twenty-four months of business bank statements
- Financial statements or T2 return; projections and a plan for growth requests
- Owner résumé and personal credit; personal net-worth statement for larger loans
- Debt schedule including any advances or leases
- Quotes for equipment or technology; purchase agreement for an acquisition
- Business registration, business number and government ID
Mistakes owners make with BDC
Treating BDC as a grant or a lender of last resort, applying at six months with no plan, asking it to refinance an advance, and waiting on a BDC decision while a time-sensitive opportunity passes. BDC is a good partner for a business with a year of results and a plan; the fast products exist for everything else.