Business Loans for Canadian Small Businesses (2026)

Growing a business almost always takes capital — to buy equipment, fund inventory, smooth out cash flow, or open a new location. Canadian small businesses have more financing options than most owners realize, each suited to a different need. Here's a clear guide to business loans in Canada.

The short answer

Canadian small businesses can access term loans (for big one-time purchases), lines of credit (for flexible working capital), equipment financing (secured by the equipment), and government-backed options like the Canada Small Business Financing Program. The right one depends on what you need the money for and your business's revenue and credit. See business loan options.

The main types of business financing

Term loan

A lump sum repaid over a set period — best for a specific, larger investment like a renovation, expansion, or acquisition. Predictable payments, fixed or variable rate.

Business line of credit

Revolving, reusable credit you draw on as needed and pay interest only on what you use — best for managing cash flow, seasonal swings, or unexpected costs.

Equipment financing

A loan or lease secured by the equipment itself — best for machinery, vehicles, or technology without draining cash. Details in equipment financing.

Canada Small Business Financing Program (CSBFP)

A government-backed program that helps small businesses access loans (commonly for equipment and leasehold improvements) by sharing the lender's risk — useful for newer or smaller businesses that might not qualify for conventional terms alone.

Commercial mortgage

If you're buying the premises rather than equipment, that's a commercial mortgage — keep property and operating financing separate to preserve borrowing capacity.

What lenders look for

• Revenue and cash flow — can the business comfortably service the debt?
• Time in business — track record reduces risk; startups face more scrutiny.
• Credit — both business and (often) the owner's personal credit.
• Security and a personal guarantee — many small-business loans require one.
• A clear use of funds — a credible plan for what the money will do.

How to choose

Match the product to the need: a one-time purchase → term loan or equipment financing; ongoing/seasonal cash flow → line of credit; buying premises → commercial mortgage; newer business needing risk-sharing → CSBFP. Many businesses combine several — for example, a commercial mortgage for the building, equipment financing for the machinery, and a line of credit for working capital. A broker helps structure the mix so each piece does its job without over-leveraging the others.

Frequently asked questions

What types of business loans are available in Canada?

Term loans, business lines of credit, equipment financing, government-backed CSBFP loans, and commercial mortgages — each suited to a different purpose.

What do lenders look for in a business loan application?

Revenue and cash flow, time in business, business and personal credit, available security or a personal guarantee, and a clear use of funds.

What is the Canada Small Business Financing Program?

A government-backed program that shares the lender's risk to help small businesses access financing (often for equipment and leasehold improvements), useful for newer or smaller businesses.

Should I use a line of credit or a term loan?

Use a term loan for a specific one-time investment with predictable payments; use a line of credit for flexible, reusable working capital and cash-flow management.

Financing your business? Talk to us — we'll match the right loan (or mix) to your goal and lender. See business loan options.