Loans to start a business in Canada before the first sale
The Canada Small Business Financing Program is the most important startup door: a bank or credit union will lend for premises, equipment and leasehold improvements to a business with no revenue if the plan and the owner’s credit hold up, because the government guarantees 85 percent of the loan and the rate is capped at prime plus 3 percent. Futurpreneur Canada lends up to $75,000 to founders aged 18 to 39 — $25,000 of its own with up to $50,000 from BDC — with two years of mentoring. BDC’s startup financing serves founders with relevant experience and outside equity. Equipment financing opens from day one for a resalable asset, and a business credit card and the founder’s own credit round out the day-one options. Grants — Starter Company Plus in Ontario, regional and Indigenous programs — are small and slow.
| Stage | Options | What they require | Typical cost |
|---|---|---|---|
| Before revenue | CSBFP, Futurpreneur, BDC startup, equipment financing, business credit card | A plan, the founder’s credit and experience, a quote for the asset | Prime + 3 percent (CSBFP); fixed rates (Futurpreneur); 7 – 30 percent (equipment) |
| 6 – 12 months of deposits | Merchant cash advance, working-capital loan, revenue-based financing | $10,000+ a month in deposits, credit 500 – 550+ | Factor rate 1.15 – 1.49; 15 – 60 percent APR |
| 12 – 24 months | Online term loan, line of credit, equipment financing | $15,000+ a month, credit 600 – 640+ | 8 – 60 percent APR |
| 24 months and filed returns | Bank term loan and line, BDC growth loans | Profitable statements, credit 650+ | Prime + 1 – 4 percent |
Startup loans at six months
Six months of steady deposits into a dedicated business account is the threshold that opens merchant cash advances, working-capital loans and revenue-based financing: roughly $10,000 or more a month in deposits, credit from about 500 to 550 and few negative-balance days. These are the most expensive products in the market and the only ones that fund a young business with a thin file in a day or two. Take one if the need is real, size it to a few months of deposits, keep every remittance clean and use the improving statements to move to a line or a term loan at twelve months.
Startup business loans with bad credit in Canada
A founder with bad credit and no revenue has the fewest doors: equipment financing secured by a strong asset, a co-signer or partner with better credit on a CSBFP or Futurpreneur application, and the founder’s own assets. From six months of deposits, the advance and working-capital products underwrite the deposits rather than the score. Rebuilding personal credit — paying every account on time, keeping utilisation low, disputing errors with Equifax and TransUnion Canada — is the fastest way to open the cheaper doors, and it takes six to twelve months.
Prepare the file
What to have ready
- A dedicated business bank account from day one
- Business registration, business number and government ID
- A plan with twelve months of projections for CSBFP, BDC or Futurpreneur
- A quote for any equipment
- Personal credit report from Equifax or TransUnion Canada, errors disputed
- Six months of deposits before applying for the fast products
Mistakes that keep startups unfunded
Running the business through a personal account so no lender can read the deposits, applying to a bank at three months without a plan, paying a fee for a “guaranteed” startup loan, stacking two advances in the first year, and mistaking a grant list for a funding plan. The sequence works when the account is clean, the file is complete and each product is used to reach the next.