Can a new business with little or no revenue get a small business loan?

People who ask how to get a small business loan with no income are weighing two different things: whether a program allows start-ups at all, and whether a particular lender will lend to one. The published sources answer the first question more clearly than the second, and the gap between them is worth knowing before you apply.

Start-ups under the CSBFP

The federal Canada Small Business Financing Program describes its eligible businesses as small businesses or start-ups operating in Canada, with gross annual revenues under a ceiling the program sets. So being new does not by itself rule you out of the program. The program page says your financial institution is responsible for deciding whether to approve the loan, and the guidelines expect them to apply the due diligence they would apply to a conventional loan of the same amount.

What BDC lists

BDC’s Small Business Loan page lists a minimum annual revenue and a minimum time in business among its criteria, and says that meeting them does not guarantee approval. It also says that for a business with a shorter operating history, within a range the page names, approval timelines may be longer, additional fees may apply and some criteria may differ. The page does not address a business with no operating history, so if yours has little or no revenue, ask BDC directly whether this product fits or which one does.

When the company has no history

The CSBFP guidelines note that for a newly incorporated borrower a credit check may be of no use since the borrower has no credit history, and that the lender should then check or take references on the principals. BDC says that without tangible collateral you will generally be required to sign a personal guarantee. If the company has no track record, ask what the lender will examine in its place, such as the owner’s credit, the plan and any security offered. See the CSBFP explained and planning financing with limited capital.