Planning to start a business in Canada or scale an existing business in 2025? Getting the right financing can make all the difference, especially in today’s economy, when high operating costs, digital transformation, and rising competition put pressure on business owners across the country. That is where business loans in Canada come in.
Whether buying equipment, hiring staff, covering inventory, or managing cash flow, business loans give capital to keep moving forward. In Canada, there are several loan options available in 2025, from government-backed financing like the Canada Small Business Financing Program (CSBFP) to custom and flexible options from banks, credit unions, and fintech lenders.
What is a Business Loan in Canada?
A business loan is money that lender provides to company, which must be paid back with interest over time. Business owners use loans to finance operations, buy inventory, hire employees, or expand.
In Canada, you can apply for both government business loans and private loans from banks or credit unions.
There are different types of business financing options available:
- Working capital financing
- Equipment financing
- Startup loan Canada
- Commercial loans
- Leasehold improvement loans
- Business line of credit
Understanding your needs helps in choosing the best business loan in Canada.
Canada Small Business Financing Program (CSBFP)
The Canada Small Business Financing Program (CSBFP) is a federal initiative that helps small businesses access loans by sharing the risk with lenders.
The government offers a loan guarantee up to 85% of the loan amount to approved lenders, making it easier for small businesses to get funded.
What Can CSBFP Be Used For?
- Purchase or upgrade equipment
- Leasehold improvements
- Buy commercial real estate
- Improve cash flow (limited to $150,000)
To qualify, your business must:
- Be a for-profit Canadian company
- Have gross annual revenue under $10 million
- Use the funds for eligible business purposes
Learn more from the official CSBFP website.
Business Development Bank of Canada (BDC)
The Business Development Bank of Canada (BDC) is a Crown corporation that offers tailored financing to entrepreneurs. BDC financing supports all stages of business growth.
Types of BDC Loans:
- Startup loan Canada: Best for businesses under 12 months old
- Equipment financing: Best to purchase machinery or vehicles
- Working capital loans: Perfect choice o manage cash flow
- Technology financing: Best for IT upgrades
- Franchise loans: Best for new or existing franchise owners
In 2025, BDC also supports green business initiatives and women-led startups. BDC doesn’t just provide funding, it also offers advisory services. Visit BDC’s website to explore your options.
How to Qualify for a Business Loan in Canada
If you’re wondering how to qualify for a business loan, here are key factors lenders evaluate in 2025:
1. Credit Score Requirement
Your credit score is one of the most important factors. Most lenders require a minimum score of 650. A higher score improves your chances of getting an unsecured business loan in Canada with better terms.
2. Personal Guarantee
Most loans, especially for small or new businesses, will require a personal guarantee. This means you’re personally liable if the business can’t repay the loan.
3. Revenue Threshold
Some lenders require a minimum revenue threshold, often between $100,000 to $250,000 in annual revenue. This shows the business is generating enough income to repay the loan.
4. Business Plan and Financials
A strong business plan with cash flow forecasts, profit and loss statements, and marketing strategies is critical. Lenders want to see that you know how to manage the funds responsibly.
How to Apply for a Business Loan in Canada
The loan application process generally includes the following steps:
- Assess your needs: What will you use the funds for?
- Check eligibility: Review Canada small business loan requirements from lenders.
- Prepare documents: Business plan, bank statements, tax returns, and ID.
- Apply: Either online or in person.
- Approval & disbursement: The funds are released once approved.
For a new business loan in Canada, government-backed loans or BDC startup loans are great places to start.
Government Business Loan 2025: Updates
In 2025, the Canadian government increased support for entrepreneurs, especially those from underrepresented communities. New funding programs aim to encourage small business support in Canada, digital innovation, and green initiatives.
If you’re looking for new business funding, the government is offering:
- Microloans for startups
- Women Entrepreneurship Loan Fund
- Indigenous Entrepreneurship Program
- Clean Technology Investment
Always check updated policies on Canada.ca.
Financing Options for Canadian SMEs
Small and medium-sized enterprises (SMEs) make up 98% of all businesses in Canada. Here are top financing options for Canadian SMEs:
- Government loan for business (like CSBFP)
- BDC financing
- Online lenders like OnDeck, Lending Loop
- Banks and credit unions
- Angel investors or venture capital (for startups)
Choosing between a business line of credit, a loan, or an equipment lease depends on your business stage and financial needs.
Final Thoughts
The future looks promising for Canadian entrepreneurs. With increased access to digital lending and government programs, it’s easier than ever to fund your dream. If you’re starting a new company, we can help with company registration in Canada.
Bestax offers business consulting, incorporation services, and tax support to help you succeed.
Don’t wait to take the next step in your business journey.
Contact Bestax for their Company Formation Services.
Quick FAQs
How do I qualify for a small business loan in Canada in 2025?
To qualify, you’ll need a solid business plan, good personal credit (typically 650+), and proof of business income or projections. Some programs may also require a personal guarantee or collateral.
What documents are needed to apply for a business loan
You’ll typically need a business plan, financial statements, tax returns, bank statements, and business registration documents. Startups may also need personal financial information and projections.
Is there a loan program for new startups in Canada?
Yes, programs like the BDC Startup Financing and Canada Small Business Financing Program (CSBFP) support new businesses. They offer loans with flexible terms for equipment, working capital, and leasehold improvements.
What’s the minimum credit score for a business loan?
Most lenders require a credit score of at least 650. A higher score improves your chances of approval and better loan terms.
How long does it take to get approved for a business loan in Canada?
Approval can take anywhere from a few days to several weeks, depending on the lender and the complexity of the application. Government-backed loans may take longer due to extra verification steps.
Can I get a business loan without collateral?
Yes, unsecured business loans are available in Canada, but may require a higher credit score and a personal guarantee. These loans usually have higher interest rates than secured loans.
What is the CSBFP, and how does it work?
The Canada Small Business Financing Program (CSBFP) helps businesses access loans by having the government guarantee up to 85% of the loan. It supports financing for equipment, leasehold improvements, and commercial property.
What’s the difference between a BDC loan and a bank loan?
BDC loans are tailored to small businesses and offer flexible terms, often with advisory support. Bank loans may have stricter requirements and fewer resources for startups or growing businesses.
Can I get a loan for leasehold improvements or equipment purchase?
Yes, both CSBFP and BDC offer financing specifically for equipment purchases and leasehold improvements. These are common uses for small business loans in Canada.
Are there government-backed business loans available in 2025?
Yes, programs like CSBFP and BDC Financing offer government-backed loans to support small and medium businesses in 2025. These loans make it easier to access funding with reduced risk for lenders.
Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts.
