What types of business loans are available in Canada?

If you are asking what business loans are available, the first thing to know is that the products are sorted by purpose. Be ready to say what the money is for. The main groups are working capital, equipment, commercial property, and the purchase of a whole business. Each fits a different need, and the same business may use more than one.

Working capital and lines of credit

BDC says working capital financing supports day-to-day operations, such as payroll, inventory, marketing, or managing timing gaps between incoming and outgoing cash. Under the federal Canada Small Business Financing Program, lines of credit can be used to finance working capital costs, meaning the day-to-day operating expenses of the business.

Equipment and commercial property

BDC’s equipment loan is for machinery, hardware, vehicles or equipment. BDC describes an equipment line, if you qualify, that lets you buy the equipment you need over a set period that depends on your sector. The federal program’s term loans can finance purchasing or improving land and buildings used for commercial purposes, and new or used equipment, including commercial vehicles. BDC also offers commercial real estate financing.

Buying or taking over a business

BDC offers a business purchase or transfer loan, and notes that buying a business can give you revenue, customers and proven operations from day one. The federal program’s term loans can also finance intangible assets and working capital. How these fit an acquisition is covered in how to get a loan to buy a business.

What the federal program does and does not do

The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. The loans come from financial institutions, and the program says your financial institution is responsible for making the decision to approve your loan. Ask the lender which of its products carry the program’s backing and which are ordinary loans.