Where Ontario businesses borrow
The Big Five banks and the credit unions — Meridian, DUCA, Alterna and the regional unions — lend to established Ontario businesses at a few points above prime and use the Canada Small Business Financing Program to reach younger and smaller ones at prime plus 3 percent. BDC lends from Toronto and regional offices across the province. Online lenders and financing companies, many headquartered in Toronto, fund term loans, lines, working-capital loans and merchant cash advances in one to five business days. Equipment lenders serve the 401 corridor’s manufacturers, contractors and carriers, and factors serve the suppliers waiting on 60-day terms from the auto plants, the government and the banks.
Requirements and rates in Ontario
The requirements are the national ones — time in business from the first deposits, monthly revenue, owner credit — with an Ontario twist: lenders know the province’s cost base and read the margins accordingly. A Toronto restaurant paying $17.60 an hour, 13 percent HST and King West rent needs stronger deposits to show the same margin as one in Windsor, and lenders size the offer to the deposits after those costs. Rates match the national ranges: a few points above prime at the banks, prime plus 3 percent under CSBFP, roughly 8 to 45 percent APR for online term loans, 10 to 60 percent for lines and factor rates of 1.15 to 1.49 on advances.
| Option | Who it suits | Typical cost | Time to fund |
|---|---|---|---|
| Bank or credit union loan | Two years of statements, profit, credit 650+ | Prime + 1 – 4 percent | 2 – 6 weeks |
| CSBFP loan through a bank | Premises, equipment, leaseholds; younger businesses | Prime + 3 percent plus 2 percent fee | 2 – 6 weeks |
| BDC loan | Growth, technology, one to two years in business | A few points above the banks | 2 – 4 weeks |
| Online term loan or line | Six to twenty-four months of deposits | 8 – 60 percent APR | 1 – 3 business days |
| Merchant cash advance / working capital | Six months of deposits, credit from 500 | Factor rate 1.15 – 1.49 / 15 – 60 percent APR | 1 – 2 business days |
| Equipment financing | Any business buying a resalable asset | 7 – 30 percent APR | 2 – 5 business days |
Small business loans in Ontario for startups
A new Ontario business has more doors than owners expect. The CSBFP will back a bank loan for premises, equipment or leasehold improvements from day one if the plan and the owner’s credit hold up; BDC funds startups with experienced owners and outside equity; Futurpreneur lends up to $75,000 to founders aged 18 to 39 with BDC matching; equipment financing secured by the asset opens with fair credit; and Ontario’s Small Business Enterprise Centres run the Starter Company Plus grant and training program in most municipalities. From six months of deposits at $10,000 or more a month, advances and working-capital loans open, and from twelve to twenty-four months, lines and online term loans.
Small business loans in Ontario with bad credit
Bad credit closes the bank and BDC doors but not the fast ones. Merchant cash advances and working-capital loans underwrite deposit consistency and publish credit guidelines around 500 to 550; invoice factoring underwrites the customers rather than the owner; equipment financing weighs a strong, resalable asset against a weak score. The price is higher and the terms are shorter, so the strategy is to take one product, size it to a few months of deposits, keep every remittance clean and use the improved statements and credit to move to a line or a term loan within a year.
Prepare the file
What to have ready
- Twelve months of Ontario business bank statements
- Business registration (Ontario corporation, sole proprietorship or partnership) and business number
- Government ID and personal credit for each owner
- Debt schedule including any advances, leases and CSBFP loans
- Quote for equipment or invoices and customer list for factoring
- For banks, BDC and CSBFP: T2 or T1 with financial statements and a short plan
Ontario programs and free help
Ontario’s Small Business Enterprise Centres, run by municipalities, offer free counselling and the Starter Company Plus program; FedDev Ontario funds regional growth projects; the Community Futures Development Corporations lend in rural Ontario; the Ontario Centre of Innovation supports technology companies; and Futurpreneur and BDC serve the whole province. None of these replaces a working-capital product for a seasonal gap, but each can lower the cost of a long-term investment or add a loan the banks would not make.