Header bg
  • section background

    How to Get a Small Business Loan in 6 Steps

    Hero bg 2
    how to get a small business loan Canada

    In this article, we’ll present you with a simple explanation of how to get a small business loan in just six steps. Small businesses are an integral part of the economy, but navigating the process of securing a loan to start one can be intimidating if you don’t know where to begin.

    Most small businesses will need to get approved for financing, and sometimes banks aren’t always willing to give a loan to small businesses or start-ups. This is why breaking it down into six manageable steps will help you better understand the qualifications for receiving a loan and help you secure the funding you need.

    1. Decide what type of loan you need to fund your business

    The good news is there are multiple sources you can get a loan from to start your business.Since small businesses are considered high-risk borrowers, you will need to make sure you have an air-tight business plan and look at lenders willing to work with you to supply a small business loan. The following are some of your options:

    • Credit unions are one of the many options business owners can look towards when financing is needed. These institutions are privately owned by customers so you’ll need to become a member, have a good credit score and collateral, as well as a business plan to present to them.

    •   are flexible funding options that let you use the funding on an as-needed basis. This type of loan can be used as a safety net to cover unexpected expenses such as repairs or cover your staff’s payroll.

    • Microloans are offered by financial institutions to business owners if they’re having a difficult time securing a normal loan for their company.

    • Small business (SBA) loans are traditional term loans that have a high borrowing maximum. Lenders will offer specific products to help you grow your business under an SBA loan, like purchasing or improving business equipment or even a vehicle for yourself or staff members. Be sure to check out SBA 7(a) loan benefits to ensure you’re getting the right financial product for your business. Small business loans in Canada may also be referred to as Canada small business financing.

    • Startup financing is made up of business credit cards and personal loans, however, lenders will require a steady cash flow to support the specific terms and conditions of the loan.

    • Community loan funds are offered by non-profit organizations to help people start their businesses when they cannot acquire a loan from a bank.

    • Online lenders are a great option if you need to get your loan approved quickly. This is a different and more streamlined way of financing your new business.

    Before you go after a loan, you’ll want to conduct research, determine the interest rates on the loan, and look into which option is the best fit for your new business.

    Additionally, for business owners in Mexico exploring loan options, finding the right **credit card deals** suitable for your financial endeavors is crucial. To navigate through opportunities such as opening lines of credit or leveraging credit card bonuses and rates to mitigate cash flow issues or fund day-to-day operations in an efficient way, learn about Crédito's best credit card deals in Mexico.

    Need Insurance for Your Small Business?

    Learn More

    2. Find out if you qualify for a business loan

    There are several things lenders look at before approving you for a loan, including:

    • Your personal credit score. Borrowers with credit scores above 680 are more likely to receive a loan from a bank. If your credit score falls below this, you will need to look at a microlender. Your personal financial history will affect this.

    • How long you’ve been in business. Most online small business loans will require you to have been in business for at least a year or two before you can qualify for a loan.

    • Your business’s annual revenue. Lenders will require a minimum annual revenue before qualifying. If you fall below their requirement you can look for a short-term loan or SBA microloan.

    Related: What is the easiest business to start with no money?

    3. Determine the payments you can afford

    You will need to look carefully into your business’ financials, and consider how much you can comfortably afford to pay towards your loan repayment each month. Some loans will require a personal guarantee of a daily amount, and others will be a monthly set repayment, so you’ll need to choose what works best for your business.

    4. Determine if you need to collaterize the loan

    Some loans will require collateral, like personal property, that the lender can seize if the loan isn’t repaid. While this is risky, it lets you borrow a higher amount at a lower interest rate. This kind of personal guarantee means you will pay back the loan if your business is unable to.

    5. Gather your documents

    Before you apply for your loan you will need the following documents ready:

    • Business and personal tax returns and bank statements.

    • Business financial statements.

    • Business legal documents, such as your commercial lease or articles of incorporation.

    • Business plan.

    6. Apply for a loan

    Now that you’ve decided which loan is the best for your business, you can apply. We recommend that you compare several similar options from a couple of different lenders before making a decision. It’s also important to consider the annual percentage rate, this will let you know the final yearly repayment amount.

    Starting a company is an exciting adventure, but it can be complicated. Before securing your business loan you’ll need to look into multiple factors and determine which option is best for your specific type of business.

    The right business insurance plan can mitigate some of these problems as you head into your loan application. Get a quote and buy your business owner’s policy plan today with APOLLO.

    APOLLO Has You Covered

    We can help you understand the benefits of Business Insurance, and get the kind of protection you need in minutes.

    Learn More

    Originally published February 15, 2022, updated March 20, 2024

    Back to APOLLO Magazine
    Share this article

    Get Tenant Insurance in less than a minute

    Get no-nonsense coverage that's the best value for your money. Purchase policies from your computer or phone, receive your documents instantly, and save when you buy online.

    Get a free quote

    4.7 rating

    Google Logo

    Get Tenant Insurance in less than a minute

    Get no-nonsense coverage that's the best value for your money. Purchase policies from your computer or phone, receive your documents instantly, and save when you buy online.

    Relevant articles

    marketing ideas for small business Canada

    17 Marketing Ideas to Promote Your Business

    does tenant insurance cover damage to landlord’s property

    Can a Landlord Make You Get Tenant Insurance?

    scope of tenant insurance canada

    What Do You Need for Tenant Insurance?

    Pros and Cons of Hiring a Real Estate Agent for Rentals

    Pros and Cons of Hiring a Real Estate Agent for Rentals

    section background
    section background

    Getting insured is as easy as 1 - 2 - 3

    Tell us (very little) about yourself

    Tell us (very little) about yourself

    Just tell us your address, your name, email and phone number. And that's it. We'll give you a price in less than a minute.

    Pay online easily and securely

    Pay online easily and securely

    You can choose to pay monthly or save money by paying for the entire year in one easy payment.

    Get your documents in your inbox - instantly

    Get your documents in your inbox - instantly

    As soon as you complete your purchase, you'll find your proof of insurance and policy documents waiting for you in your inbox.

    Get covered today - it couldn’t be easier

    We’ve provided more than 1,000,000 quotes to Canadians just like you. Give it a try!

    Google Logo


    4.7 rating

    1,781 reviews

    view all

    Across Canada

    Contact Us
    Apollo logo

    © 2024 APOLLO Insurance Solutions Ltd.

    111 Water Street, Unit 210, Vancouver, British Columbia, V6B 1A7

    APOLLO Insurance Agency Ltd. (o/a APOLLO Brokerage in the province of Ontario only) is a licensed retail brokerage, offering our clients with a comprehensive set of insurance solutions to meet their individual needs. APOLLO Insurance Agency Ltd. maintains necessary corporate licensing in provinces across Canada. Availability of products and service depends on licensing and product availability. The information that appears on this page is provided for information purposes only. Advertised products and prices are not guaranteed and vary based on insurance provider and/or insurance company's discretion and product availability.

    Transparency and Disclosure: APOLLO Insurance Agency's role is to provide you with exceptional service and the best insurance products that suit your needs. As a licensed retail brokerage, our compensation is based on a commission basis already built into your insurance premium and varies based on the product purchased through our platform. For a description of how APOLLO Insurance Agency is compensated and how this is calculated, please refer to our Compensation Disclosure document. For consumers in Ontario, please review the RIBO Conduct Fact Sheet and the RIBO Conduct Guidance document.