If you need capital to grow your business or require a cash infusion to overcome challenges, help is available. From unsecured lines of credit to asset-based loans, Ontario institutions tailor financing to meet the needs of small, medium, and large companies.
But, where should you begin your search for business loans in Ontario?
What Types of Business Loans Are Available?
Depending on your needs and desired time horizon, you may find different types of loans more desirable than others.
Business Term Loans
Business term loans are typically used for expansion projects, like opening a new manufacturing plant or expanding into a new region. With a business loan in Toronto, the borrower receives a lump sum of cash and typically repays the balance in fixed monthly installments. It’s normally an amortizing loan, which means each payment includes interest and a partial principal repayment.
Business Line of Credit
A business line of credit is a revolving vehicle, where you can borrow from the balance periodically up to your limit. Like a credit card, you only owe interest on the funds withdrawn, and the interest charges stop once you repay the amount owed. Like most term loans, business lines of credit in Mississauga and other areas of Ontario are usually unsecured.
Canada Small Business Financing Loan (CSBFL)
Designed specifically for small businesses, a Canada Small Business Financing Loan (CSBFL) makes it easier for small firms to obtain capital. Term loans can reach upwards of $1,000,000, of which $500,000 is allocated for equipment, leasehold improvements, intangible assets, and working capital, and $150,000 can be used solely for intangible assets and working capital. The Government of Canada guarantees 85% of the loan — which helps increase approval rates — and the following repayment options are available:
- Floating-rate principal plus interest
- Floating-rate principal including interest (blended payments)
- Fixed-rate principal plus interest rate
- Fixed-rate principal including interest (blended payments)
Asset-Based Loans
Unlike the first two options, asset-based loans are forms of secured financing, which means businesses must post collateral. For example, if you need an asset-based loan in Windsor or Ottawa, acceptable collateral typically includes invoices, accounts receivable, inventory, property, machinery, and real estate.
For more information, please see our Asset-Based Financing Guide, and for provincial resources, please view our local guides for Ontario, Alberta, and BC.
What If I Have Bad Credit?
If poor credit has your business struggling to obtain affordable financing, piling on expensive debt likely does more harm than good. Alternative lenders often provide business loans in Toronto and Scarborough, but the interest charges are usually much higher. Therefore, fixing your credit score is the best pathway to improve the health of your personal and business finances.
To build momentum, please consult our guide on How to Improve Your Canadian Credit Score. It includes 10 proven strategies to increase your credit score. The Government of Canada notes that “it takes 30 to 90 days for information to be updated in your credit report,” so it doesn’t take long to notice progress. However, for substantial jumps, like 400 to 700, please understand that it’s a long-term commitment.
As secondary options, several fintech companies offer Canadians unique pathways to rebuild their credit. Our Borrowell Credit Report Review highlights its three main advantages:
- Monitor & Track
- Understand & improve
- Find the Right Product
The first lets you track your success, flag errors, and spot fraudulent activity. The second provides access to Molly, Borrowell’s AI-powered Credit Coach, who provides personalized tips, articles, and tools to become more credit savvy. Last, Borrowell Canada curates a list of financial products that you may find useful. In addition, Borrowell Canada is free, and you don’t need a credit card to join.
Similarly, our KOHO Credit Building Review highlights how a $30 to $500 secured line of credit can rebuild your reputation. After depositing the funds and borrowing against the balance, KOHO reports your repayments to Equifax and TransUnion, which can increase your credit score. However, KOHO is not free, so please read the full review to determine if it fits your needs.
Last, KOHO’s secured credit card is free if you set up direct deposits or load $1,000 into your account per month. It was rated one of the “3 Best Prepaid Credit Cards in Canada for 2024” by Nerdwallet, there is no credit check, and approval is guaranteed. You also earn cash back on purchases, and on-time repayments can boost your credit score. For all the details, please read our KOHO Credit Cards Review.
10 Places to Get Business Loans in Ontario
If your credit score is in tip-top shape, traditional banks in Toronto, Ottawa, London, and other regions are where you should search for a business loan. The Big 5 — RBC, TD, BMO, CIBC, and Scotiabank — have branches across Ontario, so it’s easy to speak with a business advisor or loan officer.
For small businesses, alternative lenders often provide business loans in Toronto, Scarborough, Mississauga and other regions. The Big 5 tends to prioritize larger companies, making alternative lenders more accessible if you’re an up-and-coming firm or have lower revenue.
If bad credit is an issue, please improve your credit score before applying for a business loan. Obtaining the lowest rates and best terms are key to maximizing shareholder returns, and a good credit score helps Ontario businesses achieve that goal.
Below, we curated a list of institutions where you can find business loans in Ontario.
1. Royal Bank of Canada
Headquartered in Toronto, the Royal Bank of Canada (RBC) offers short, medium, and long-term loans to businesses of all sizes. You can also obtain asset-based loans, small business loans, and business lines of credit.
2. Toronto-Dominion Bank
As Canada’s second-largest institution behind RBC, Toronto-Dominion Bank (TD) can meet all your financing needs. From operating credit, term loans, lines of credit, small business loans, and asset-based financing, there are solutions for Ontario businesses. The best approach is to book a consultation with a TD Relationship Manager and see how the firm can help.
3. Canadian Imperial Bank of Commerce
From London to Scarborough to Ottawa, the Canadian Imperial Bank of Commerce (CIBC) has branches across Ontario. Moreover, the Toronto-based firm also offers term loans, asset-based loans, small business loans, and business lines of credit.
4. Bank of Montreal
Like its Big 5 counterparts, the Bank of Montreal (BMO) offers an assortment of business loan solutions to clients in Toronto, Mississauga, and across Ontario. From floating to fixed rates and CAD and USD lines of credit, the options are endless, and companies of most sizes can apply.
5. Scotiabank
Rounding out our top five, Scotiabank is another stalwart of Canadian finance. Although its roots are in Nova Scotia, Scotiabank is headquartered in Toronto and caters to businesses across Ontario.
6. Journey Capital
Because the five options above are best suited for larger businesses, Journey Capital is a great resource for smaller companies. The application process takes as little as 10 minutes, and funding is sometimes available within 24 hours. Moreover, Journey Capital simplifies the loan process by offering three products:
- Business Term Loans of $5,000 to $300,000
- FlexFunds Advance of $5,000 to $300,000
- Business Line of Credit up to $300,000
Moreover, inquiring won’t impact your credit score, and Journey Capital is a member of the Canadian Lenders Association (CLA), which promotes ethical credit practices.
7. Equitable Bank
With its head office in Toronto, Equitable Bank prides itself on embracing an entrepreneurial spirit. Whether it’s small-business owners, entrepreneurs, owner-operators, or emerging investors, you have several financing options to choose from:
- Asset Repositioning
- Inventory Loans
- Term Loans
- Conventional and Secured Construction Loans
- Commercial Real Estate Loans
Equitable Bank is also a CLA member and has a team of advisors who help find the best product for your business.
8. Lending Loop
As another small business solution provided in Toronto, Lending Loop is a fintech firm that helps connect investors with borrowers. The service is free, and since 2015, Lending Loop has helped facilitate more than $90 million in Canadian small business loans.
You can borrow anywhere from $1,000 to $500,000, and the platform can also help you obtain a no-FX business credit card, a free U.S. bank account, and access to market-leading FX rates.
Likewise, Lending Loop is also a CLA member.
9. Greenbox Capital
Dedicated to serving small and mid-sized businesses, Greenbox Capital offers business loans of $3,000 to $500,000 in all industries across Canada. Funding is available in as little as one business day, and the firm has an office in Toronto. The following loan options are available:
- Merchant Cash Advances
- Invoice Factoring
- Small Business Lines of Credit
- Asset-Based Loans
- Alternative Small Business Loans
In addition, Greenbox Capital is a CLA member and promotes responsible lending practices in Canada.
10. Swoop Canada
While Swoop Canada has operations across the globe, it has an office in Toronto, which makes it a great resource for Ontario businesses. As a credit broker, the company helps match borrowers with lenders and does not issue capital itself. However, the application process only takes a few minutes, and Swoop Canada solicits offers from banks and alternative lenders to find you the best option in as little as 24 hours.
Some of the options available include:
- Working Capital Loans
- Small Business Loans
- Term Loans
- Asset-Based Loans
- Merchant Cash Advances
- Invoice Financing
- Commercial Mortgages
Moreover, there are several other loan options to choose from, and Swoop Canada is also a member of the CLA.
Conclusion
As the finance capital of Canada, Toronto businesses have endless credit options available. And if you operate in Mississauga, Scarborough, London, Windsor, or Ottawa, most firms extend financing across the province, so it should be easy to find solutions that fit your needs.
Our advice is to shop around and submit several applications before signing on the dotted line. That way, you can obtain the best terms and lowest rates, which will benefit the long-term health of your business.
Alex Demolitor is a financial writer hailing from Halifax. Alex has a Bachelors Degree from King's College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators. He has been published on many financial publications, including Investing.com, FXEmpire and others.
