Do you Know your Lending Options?

From banks, credit unions, Alternative lenders (eCommerce, invoice financing, online lending platforms, peer-to-peer) and Government grants and loans there are more lenders than ever before. Our suite of resources is designed to help you begin the decision making process when choosing a lending partner. There are videos to help you learn from industry experts, definitions to help you understand the lending landscape, and events and links tailored to you.

Types of Lenders and Products

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Credit Card

Line of Credit

Term Loans

Merchant Cash Advance

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Eligibility

Annual Revenue:

  • Minimum annual level of income similar to a midrange consumer credit card ~$35k

Time in Business:

  • Varies depending on type of card offering. More focused on credit scores

Other:

  • Usually requires personal credit history for small business

Annual Revenue:

  • Must be operating with a profit. Revenue amounts will determine eligible loan amounts

Time in Business:

  • Usually 2 years in business (accessible for 6+ months in business usually relying on personal credit)

Annual Revenue:

  • Must be operating with a profit. Revenue amounts will determine eligible loan amounts

Time in Business:

  • Usually 2 years in business (accessible for 6+ months in business usually relying on personal credit)
Typical Range

Average limit of $50k

$10,000 – $250,000

$10,000 – $1,000,000

Features

Payment Schedule:

  • Monthly billing cycle interest-free; 2-5% Minimum Payment

Timeliness to Fund:

  • Immediate use once approved

Origination & Interaction Model:

  • Apply over the phone or with a business specialist in branch. Apply online if already a bank client and tying to your personal credit score

Other Features:

  • A variety of traditional credit card awards – Can be tied to the business or the person applying (i.e. personal credit score, but shifting to business credit score)

Payment Schedule:

  • Flexible payment schedule

Timeliness to Fund:

  • Immediate use once approved

Origination & Interaction Model:

  • Apply in branch with a specialist. 24/7 phone support or usual in-branch working hours

Other Features:

  • A variety of features are targeted to specific industries (e.g. agriculture, franchises) – Can be tied to business banking accounts to act as overdraft – Overdraft accounts fill the gap up to $10k

Payment Schedule:

  • 5 year term with 15 year amortization

Timeliness to Fund:

  • As soon as 72 hours after funding

Origination & Interaction Model:

  • Apply in branch with a specialist. 24/7 phone support or usual in-branch working hours

Other Features:

  • A variety of features are targeted to specific industries (e.g. agriculture, franchises)
Eligibility

Annual Revenue:

  • Varies depending on card features. Usual minimum annual spending of $25,000 and AUM of $250,000

Time in Business:

  • Varies depending on type of card offering. More focused on credit scores

Other:

  • Usually requires personal credit history for small business

Annual Revenue:

  • No fixed amount. Annual revenue will factor into the total eligible funding amount

Time in Business:

  • No fixed amount. Time in business will factor into the total eligible funding amount

Other:

  • This type of LOC does not require specified assets as collateral—however a general lien and personal guarantee will likely be required
  • Because there is no specified collateral associated with this type of credit line, the business will likely need a stronger credit profile along with a positive business track record to qualify.
  • Additionally, interest rates may be slightly higher; and unsecured credit lines are often smaller

Annual Revenue:

  • Have not declared bankruptcy in the past 7 years

Time in Business:

  • No fixed amount. Time in business will factor into the total eligible funding amount

Other:

  • Term loans are generally offered on a medium to long-term basis
  • They are available for a fixed time period and are repayable either in accordance with a prescribed schedule or when a prescribed default event takes place.

Annual Revenue:

  • No fixed amount. Annual revenue will factor into the total eligible funding amount

Time in Business:

  • No fixed amount. Time in business will factor into the total eligible funding amount
Typical Range

Average limit of $50k

Starting limit of $5,000 up to $250,000

Up to $100,000

Up to $4,999

Features

Payment Schedule:

  • Monthly billing cycle interest-free; 2-5% Minimum Payment

Timeliness to Fund:

  • Immediate use once approved

Origination & Interaction Model:

  • Apply online through the credit union portal

Other Features:

  • A variety of premium cards are offered with travel, auto, fraud, and health insurance coverage

Payment Schedule:

  • Pay only monthly interest on an outstanding balance or 2% of the outstanding balance

Timeliness to Fund:

  • Fund available once application is approved (usually 48-72 hours)

Origination & Interaction Model:

  • Apply online in 5-10 minutes. Phone support available if required

Other Features:

  • Offer industry specific products (agriculture, franchises, accounting, architecture, engineering, law, real estate, physicians, pharmacists, vets, chiropractors, dentists)

Payment Schedule:

  • Flexible repayment options: weekly, biweekly, semi-monthly, or monthly repayments
  • Repayment of loan without penalties

Timeliness to Fund:

  • Fund available once application is approved (usually 48-72 hours)

Origination & Interaction Model:

  • Apply online in 5-10 minutes. Phone support available if required

Payment Schedule:

  • Pay interest only at month end

Timeliness to Fund:

  • Fund available once application is approved (usually 48-72 hours)

Origination & Interaction Model:

  • One time application that allows you to borrow up to a predetermined limit
Eligibility

Annual Revenue:

  • At least $50k in annual sales

Time in Business:

  • 12 months or more

Other:

  • 18 years or older
  • 20% of business owned with good credit
  • No recent bankruptcy or liens

Annual Revenue:

  • At least $50k in annual sales

Time in Business:

  • 12 months or more

Other:

  • 18 years or older
  • 20% of business owned with good credit
  • No recent bankruptcy or liens

Annual Revenue:

  • Usually$8,000+ per month

Time in Business:

  • Usually 3+ months

Other:

  • Real time credit check online;
  • Covers applicants ranging from no credit to excellent credit – reflected in the loan amount
Typical Range

No limit – customers can use as much credit as they request but risk being declined based on historical payment habits

No limit – customers can use as much credit as they request but risk being declined based on historical payment habits

Ranges from $100 – $500,000 depending on credit score

Features

Payment Schedule:

  • Repayment over 3, 6, or 12 months

Timeliness to Fund:

  • Dependent on eligibility

Origination & Interaction Model:

  • Apply online. 24/7 online chat and email support. Phone support available

Other Features:

  • Products exist that are sold to merchants to promote to customers. Merchants are advised to educate customers at the POS regarding funding options including credit cards

Payment Schedule:

  • Only pay interest on what you draw

Timeliness to Fund:

  • Dependent on eligibility

Origination & Interaction Model:

  • Apply online. 24/7 online chat and email support. Phone support available

Payment Schedule:

  • 3-36 month terms

Timeliness to Fund:

  • Funded within 24 hours

Origination & Interaction Model:

  • Apply online. 24/7 online chat and email support. Phone support available

Other Features:

  • Products exist that are sold to merchants to promote to customers. Merchants are advised to educate customers at the POS regarding funding options including credit cards
Eligibility

Annual Revenue:

  • Annual revenue / average monthly revenue (e.g. at minimum $100,000 in the past 12 months

Time in Business:

  • Time in business (e.g. at least 6 months)

Other:

  • Have active commercial lease (e.g. physical office / store)
  • Personal credit (e.g. 610+)
  • No open bankruptcies
  • Some industries are restricted (online lists provided by each lender)

Annual Revenue:

  • Annual revenue / average monthly revenue (e.g. at minimum $100,000 in the past 12 months

Time in Business:

  • Time in business (e.g. at least 6 months)

Other:

  • Have active commercial lease (e.g. physical office / store)
  • Personal credit (e.g. 610+)
  • No open bankruptcies
  • Some industries are restricted (online lists provided by each lender)

Annual Revenue:

  • Annual revenue / average monthly revenue (e.g. at minimum $100,000 in the past 12 months

Time in Business:

  • Time in business (e.g. at least 6 months)

Other:

  • Have active commercial lease (e.g. physical office / store)
  • Personal credit (e.g. 610+)
  • No open bankruptcies
  • Some industries are restricted (online lists provided by each lender)
  • Average credit / debit card sales (e.g. $5,000 per month)
Typical Range

$5,000 – $300,000

$5,000 – $300,000

Up to $300,000

Features

Payment Schedule:

  • Repayments are automatically deducted from the bank

Timeliness to Fund:

  • Turn around for approvals are within a day typically

Origination & Interaction Model:

  • Online origination and interactions

Payment Schedule:

  • Repayment options can be monthly or immediate partial repayment upon loan approval. I.e. repayment of 15$ immediately after 100$ loan is approved

Timeliness to Fund:

  • Online loans are characterized by their fast approval 2 – 24 hours but higher loan amounts require longer review periods but are typically less than 3 – 4 business days

Origination & Interaction Model:

  • Online origination and interactions. 24/7 online support

Payment Schedule:

  • Replay interest at month end

Timeliness to Fund:

  • Typically 48 hours or less

Origination & Interaction Model:

  • Online origination and interactions
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Eligibility

Annual Revenue:

  • $100,000+

Time in Business:

  • 1 year. Must be incorporated

Other:

  • Some industries are restricted (online lists provided by each lender)
  • Personal credit (e.g. 610+)
Typical Range

$5,000 to $250,000
Loans averaging around 35K

Features

Payment Schedule:

  • Monthly repayments;
  • Early repayment available.
  • Terms from 3 months to 5 years

Timeliness to Fund:

  • 2 days after approval you are eligible for funding. Funding process varies depending on lender interest in the business model. Listings removed from site after 30 days if not funded

Origination & Interaction Model:

  • Application submitted online – 30 minute application process

Other Features:

  • 100 day “refund period” where you can pay off the principal and waive fees paid
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Eligibility

Annual Revenue:

  • Generating revenues for 24 months

Time in Business:

  • Generating revenues for 24 months

Other:

  • Reached the age of majority in your province
  • Good credit history
  • Evidence of cash funding (varying from 25% – 75%)
Typical Range

Up to $100,000

Features

Payment Schedule:

  • Reporting requirements exist for certain projects
  • Loans repaid over 60 months, capital postponement for the first 6 months (initial 6 payments are interest only)
  • Loan management fees $150 annually, $150 per loan amendment

Timeliness to Fund:

Varies significantly – if needing to prove eligibility an online application is submitted for review/ potential interview. Variations include:

  • Apply online, 5 business days or less
  • Find partnering bank to match government funding
  • Negotiate final agreement once approved

Origination & Interaction Model:

  • Apply online. In person interview required

Other Features:

  • Very industry specific – loans for underrepresented genders, races, geographies, solutions (i.e. Business Expansion, Capital Adoption, Innovation, R&D, Hiring & Training etc.)

Line of Credit

Equipment Loans

Invoice Loans

Mortgages

CSBFL (Canada Small Business Financing Program)

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Eligibility

Annual Revenue:

  • Must be operating with a profit. Revenue amounts will determine eligible line of credit amount

Time in Business:

  • Usually 2 years in business (accessible for 6+ months in business usually relying on personal credit)

Annual Revenue:

  • Must be operating with a profit. Revenue amounts will determine eligible loan amounts

Time in Business:

  • Usually 2 years in business (accessible for 6+ months in business usually relying on personal credit)

Annual Revenue:

Time in Business:

Other:

  • Mortgages require a current appraisal (AACI qualified, bank approved appraiser), a passing Environmental report (Phase I ESA), and may require a Building Condition Report. Canada Mortgage and Housing Corporation (CMHC) requests, if required, must comply with CMHC guidelines

Annual Revenue:

  • Less than $10,000,000 in the application year

Time in Business:

Other:

  • Personal guarantee required starting at 25% of the loan
  • Business is for profit and is not a farm, charity, or religious enterprise
  • The assets purchased or improved must be used in your business
Typical Range

Up to 100% of the secured asset
Maximum of $1,500,000

Up to 100% of the secured asset
Maximum of $1,500,000

Up to 75% of the total mortgage amount ranging from $250,000 to $25,000,000

Up to $1,000,000

Features

Payment Schedule:

  • Up to 7 year terms with 25 year amortization. Annual 10% prepayment privilege at no charge

Timeliness to Fund:

  • Usually within 72 hours post approval. Dependent on structure

Origination & Interaction Model:

  • Apply in branch with a specialist. 24/7 phone support or usual in-branch working hours

Payment Schedule:

  • Up to 7 year terms with 25 year amortization

Timeliness to Fund:

  • Usually within 72 hours post approval. Dependent on structure

Origination & Interaction Model:

  • Apply in branch with a specialist. 24/7 phone support or usual in-branch working hours

Payment Schedule:

  • 5-, 7- and 10-year mortgages and variable rate commercial mortgages with 3-, 5-, 7- and 10-year terms with flexible repayment options. Make optional pre-payments (up to 10% of the original loan amount every year)

Timeliness to Fund:

  • Pre approval within 5 minutes online – honoured for up to 120 days

Origination & Interaction Model:

  • Apply in branch with a specialist. 24/7 phone support or usual in-branch working hours

Other Features:

  • Swap to commercial mortgages for income generating real estate worth more than $500k
  • Industry specific options backed by government funding (e.g. 80% of a loan for farmers up to $500k)

Payment Schedule: – Choice of the following:

  • 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)

Timeliness to Fund:

  • Varies significantly – if needing to prove eligibility an online application is submitted for review/ potential interview.

Origination & Interaction Model:

  • Apply online. In person interview required

Other Features:

  • Purchases made within the past six months are eligible for financing
  • Equipment loans up to a 10-year amortization
  • Leasehold improvements up to a 7-year amortization
  • Real property loans/ immovable up to 15-year amortization
Eligibility

Annual Revenue:

  • More than $100,000 in annual sales

Time in Business:

  • Established business (usually min 1 year in business)

Annual Revenue:

  • No fixed amount. Annual revenue will factor into the total eligible funding amount

Time in Business:

  • No fixed amount. Time in business will factor into the total eligible funding amount

Annual Revenue:

  • Required income history to prove ability to pay off mortgage amount (dependent on total mortgage amount and terms)

Time in Business:

  • No fixed amount. Time in business will factor into the total eligible funding amount

Other:

  • Required down payment

Annual Revenue:

  • Less than $10,000,000 in the application year

Time in Business:

Other:

  • Personal guarantee required starting at 25% of the loan
  • Business is for profit and is not a farm, charity, or religious enterprise
  • The assets purchased or improved must be used in your business
Typical Range

Up to $500,000

Up to $100,000

Up to $5,000,000

Up to $1,000,000

Features

Payment Schedule:

  • Monthly Interest only payments

Timeliness to Fund:

  • Fund available once application is approved (usually 48-72 hours)

Origination & Interaction Model:

  • Apply online in 5-10 minutes. Phone support available if required

Other Features:

  • Will use real estate equity to fund business needs

Timeliness to Fund:

  • Fund available once application is approved (usually 48-72 hours)

Origination & Interaction Model:

  • Apply online in 5-10 minutes. Phone support available if required

Other Features:

  • Work with an advisor to pledge assets to secure the loan (customized to each business and model)
  • Eligible assets vary by industry (Farms: grain bins and harvesting equipment
    Commercial/Industrial: heavy equipment for mining or construction, office equipment and utility trucks/trailers
  • Medical/Technological: banking systems and computer networks
  • Manufacturing: production and packaging equipment, machine tools and robotics)

Payment Schedule:

  • Weekly, bi-weekly, semi-monthly, monthly

Timeliness to Fund:

  • 90-day guarantee on pre-approved mortgages

Origination & Interaction Model:

  • Application can be started online for pre-approval but a screening call or meeting is required

Other Features:

  • Being provincially regulated, CUs have more mortgage options available to members than the big bank

Payment Schedule – Choice of the following:

  • 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)

Timeliness to Fund:

  • Varies significantly – if needing to prove eligibility an online application is submitted for review/ potential interview.

Origination & Interaction Model:

  • Apply online. In person interview required

Other Features:

  • Purchases made within the past six months are eligible for financing
  • Equipment loans up to a 10-year amortization
  • Leasehold improvements up to a 7-year amortization
  • Real property loans/ immovable up to 15-year amortization
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Eligibility

Annual Revenue:

  • Annual revenue ranging from $50,000 – $130,000

Time in Business:

  • 12 months or more in business

Other:

  • Non-Compliance with leverage and liquidity ratios as well as a loss history but profitable future
  • At least fair or better personal credit (usually credit score above 600)
  • No recent bankruptcies or tax liens
  • Company ownership (usually at 20% of the business)
Typical Range

Varies between $5K – $300,000K. Companies can expect to receive approximately 80%-90% of outstanding invoice amount

Features

Payment Schedule:

  • Only pay interest on what you draw. Term usually ranges from 6 months to 36 months

Timeliness to Fund:

  • Dependent on eligibility. Funding approved as quickly as 24 business hours

Origination & Interaction Model:

  • Apply online. 24/7 online chat and email support. Phone support available

Other Features:

  • Private confidentiality – customers are not aware that a company is using invoice financing
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Eligibility

Refer to CSBFL

Refer to CSBFL

Through banks, small businesses looking to purchase or improve their assets for new or expanded operations could benefit from the Canada Small Business Financing Loan (CSBFL)
New businesses looking for financial support to start or grow a company
Established businesses experiencing issues with cash flow as a result of a large investment

Typical Range

Usually up to $100,000

Features

Payment Schedule:

  • Funding paid back over 12 equal weekly instalments

Timeliness to Fund:

  • Initial limit provided within 24 hours of application. Early payback permitted

Origination & Interaction Model:

  • Apply online for an instant quote. Screening call required

Knowing your lending options

Hear from Small Business Owners

Small Business Case Studies

The Pink Studio - Getting a Leg Up in Business

How a dance studio took a leap of faith and landed on both feet thanks to Ontario’s small business lending providers

The Mercantile - The Recurring Gift of Borrowing Power

How a trendy retail shop has used a simple lending product to support consistently comfortable growth

Paul's Boutique - A Sound Approach to Borrowing for Small Business

How a music retailer orchestrated 18 years of growth with the help of Ontario small business lending providers

Business Cloud Inc. - Aiming for the Sky

How a creative approach to lending has enabled a small business to achieve big business growth

CityBlast - Tapping into an Online Lending Community

How CityBlast is using peer-to-peer lending to grow a social media empire

Grantbook - The Borrowing Power to Do More Good

How Grantbook pays it forward with the help of Ontario small business lending

Hear from the Lenders

Definitions and Links

Definitions - Lenders
Product Definition
Bank Financial institution licensed to receive deposits and make loans. In Canada, this is inclusive of domestic banks, subsidiaries of foreign banks, or branches of foreign banks
Credit Union & Caisse Populaire A full service financial co-operative that provides chequing accounts, mortgages, business loans and investment advice. Credit Union Boards of Directors are democratically elected members of their community. This ensures credit unions’ decisions are based on local realities.
Peer-to-Peer An online lending platform that allows small businesses to borrow from a pool of lenders on fixed repayment terms in exchange for interest profits (commonly referred to as Crowdfunding)
Online Lending Platform An online lending platform that offers traditional lending products through a webpage and online applications and servicing relying on technology for quick evaluation and customer response processes
eCommerce Online lending providers that offer personal or business funding products as additional services to eCommerce
Invoice Financing Invoice financing firms allow businesses to borrow money against the amounts due from customers. Businesses pay a percentage of the invoice amount to the lender as a fee for borrowing the money
Government The Government of Ontario offers funding for grants and/or loans to Small Businesses that meet their eligibility requirements. These loans may be issued independently or in partnership with a Financial Services provider

Product

Definition

Bank
Financial institution licensed to receive deposits and make loans. In Canada, this is inclusive of domestic banks, subsidiaries of foreign banks, or branches of foreign banks
Credit Union & Caisse Populaire
A full service financial co-operative that provides chequing accounts, mortgages, business loans and investment advice. Credit Union Boards of Directors are democratically elected members of their community. This ensures credit unions’ decisions are based on local realities.
Peer-to-Peer
An online lending platform that allows small businesses to borrow from a pool of lenders on fixed repayment terms in exchange for interest profits (commonly referred to as Crowdfunding)
Online Lending Platform
An online lending platform that offers traditional lending products through a webpage and online applications and servicing relying on technology for quick evaluation and customer response processes
eCommerce
Online lending providers that offer personal or business funding products as additional services to eCommerce
Invoice Financing
Invoice financing firms allow businesses to borrow money against the amounts due from customers. Businesses pay a percentage of the invoice amount to the lender as a fee for borrowing the money
Government
The Government of Ontario offers funding for grants and/or loans to Small Businesses that meet their eligibility requirements. These loans may be issued independently or in partnership with a Financial Services provider
Definitions - Lending Products
Type Product Working Definition Textbook Definition When to Use

Unsecured

Credit Card A credit card is a line of credit with a limit determined by your lending provider based on credit history. A credit card offers a monthly grace period for payments before interest is applied. This debt is always available and can be borrowed again once repaid. A revolving credit line for day to day purchases with a monthly grace period As a payment card used at the POS. Used to cover day to day operating expenses that can be repaid within month end. Usually has high interest late payment fees and therefore should not be used for long-term purchases.
Line of Credit An unsecured line of credit with a limit determined by your lending provider based on credit history. The line of credit is a pool of money that is always available and can be borrowed again once repaid. This loan is not secured by any assets and therefore the interest rate tends to be higher than secured debt products. An unsecured revolving credit line is a pool of money that allows you to borrow only what you need when you need it To make up temporary shortfalls in cashflows. For coverage of inventory, salary, or other operational expenses. As this product is not secured by collateral it often has higher interest charges than its secured counterpart.
Term Loans An unsecured term loan is a fixed amount of debt borrowed over an agreed upon period. The amount, timeline, and payment terms are determined by your lending provider based on credit history. This loan is not secured by any assets and therefore the interest rate tends to be higher than secured debt products. An unsecured term loan is a fixed amount borrowed over an agreed time period based on the borrower’s creditworthiness Refinancing, acquisitions, expansions and other major purchases which cannot be used as collateral against the loan.
Merchant Cash Advance A merchant cash advance is an upfront lump sum payment from a lending provider. It is repaid by the borrower by a certain percent of sales. The percentage of future sales is determined by the lending provider and collected at time of sale. Provides a lump sum upfront payment which is repaid as a percentage of future sales. To make up short term liquidity gaps. For coverage of expenses between sales periods. This is a high interest rate product that should be used to temporarily cover sales gaps.

Secured

Line of Credit A line of credit with a limit determined by your lending provider based on credit history. The line of credit is a pool of money that is always available and can be borrowed again once repaid. A secured revolving credit line is a pool of money that allows you to borrow only what you need when you need it at lower interest rates by being tied directly to a seizable asset as collateral. To make up temporary shortfalls in cashflows. For coverage of inventory, salary, or other operational expenses all secured by a predefined asset as collateral.
Equipment Loans A loan of a fixed amount of debt borrowed over a defined period. The loan amount is secured against the asset (equipment) being purchased. The amount, timeline, and payment terms are determined by your lending provider based on credit history. This loan is typically repaid in regular monthly periods. A term loan secured against the asset being purchased, and repaid in regular monthly payments Funding for specific asset or capital investments. The equipment that is being purchased operates as the collateral asset.
Invoice Loans An invoice loan is an upfront lump sum payment from a lending provider. The payment is a defined percentage of your outstanding invoices. When these invoices are collected from your outstanding accounts, the payment goes to the lending provider to pay back the loan amount. Provides a lump sum percentage of the invoice amount with the remainder as a fee. Short-term funding without a debt requirement for payback terms. Although no debt is taken on, the interest is taken as a percent of sales and very high compared to other products.
Mortgages A mortgage is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender wherein the borrower receives cash upfront then makes payments over a set time span until they pay back the lender in full. The amount, timeline, and payment terms are determined by your lending provider based on credit history. A mortgage is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender wherein the borrower receives cash upfront then makes payments over a set time span until they pay back the lender in full. Long-term funding for property and/or real estate purchase. The property operates as the collateral asset.
CSBFL The Canada Small Business Financing Program is a government run financing initiative. It makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. Small Businesses much identify a willing lending provider who will then open the loan and receive a portion of the funding from the government. The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. Businesses that fit the eligibility requirements and are seeking growth funding. The purposes of these grants is to foster business growth in the community.

 

Type

Unsecured

Product

Credit Card

Working Definition

A credit card is a line of credit with a limit determined by your lending provider based on credit history. A credit card offers a monthly grace period for payments before interest is applied. This debt is always available and can be borrowed again once repaid.

Textbook Definition

A revolving credit line for day to day purchases with a monthly grace period

When to Use

As a payment card used at the POS. Used to cover day to day operating expenses that can be repaid within month end. Usually has high interest late payment fees and therefore should not be used for long-term purchases.

Type

Unsecured

Product

Line of Credit

Working Definition

An unsecured line of credit with a limit determined by your lending provider based on credit history. The line of credit is a pool of money that is always available and can be borrowed again once repaid. This loan is not secured by any assets and therefore the interest rate tends to be higher than secured debt products.

Textbook Definition

An unsecured revolving credit line is a pool of money that allows you to borrow only what you need when you need it

When to Use

To make up temporary shortfalls in cashflows. For coverage of inventory, salary, or other operational expenses. As this product is not secured by collateral it often has higher interest charges than its secured counterpart.

Type

Unsecured

Product

Term Loans

Working Definition

An unsecured line of credit with a limit determined by your lending provider based on credit history. The line of credit is a pool of money that is always available and can be borrowed again once repaid. This loan is not secured by any assets and therefore the interest rate tends to be higher than secured debt products.

Textbook Definition

An unsecured term loan is a fixed amount borrowed over an agreed time period based on the borrower’s creditworthiness

When to Use

Refinancing, acquisitions, expansions and other major purchases which cannot be used as collateral against the loan.

Type

Unsecured

Product

Merchant Cash Advance

Working Definition

A merchant cash advance is an upfront lump sum payment from a lending provider. It is repaid by the borrower by a certain percent of sales. The percentage of future sales is determined by the lending provider and collected at time of sale.

Textbook Definition

Provides a lump sum upfront payment which is repaid as a percentage of future sales.

When to Use

To make up short term liquidity gaps. For coverage of expenses between sales periods. This is a high interest rate product that should be used to temporarily cover sales gaps.

Type

Secured

Product

Line of Credit

Working Definition

A line of credit with a limit determined by your lending provider based on credit history. The line of credit is a pool of money that is always available and can be borrowed again once repaid.

Textbook Definition

A secured revolving credit line is a pool of money that allows you to borrow only what you need when you need it at lower interest rates by being tied directly to a seizable asset as collateral.

When to Use

To make up temporary shortfalls in cashflows. For coverage of inventory, salary, or other operational expenses all secured by a predefined asset as collateral.

Type

Secured

Product

Equipment Loans

Working Definition

A loan of a fixed amount of debt borrowed over a defined period. The loan amount is secured against the asset (equipment) being purchased. The amount, timeline, and payment terms are determined by your lending provider based on credit history. This loan is typically repaid in regular monthly periods.

Textbook Definition

A term loan secured against the asset being purchased, and repaid in regular monthly payments

When to Use

Funding for specific asset or capital investments. The equipment that is being purchased operates as the collateral asset.

Type

Secured

Product

Invoice Loans

Working Definition

An invoice loan is an upfront lump sum payment from a lending provider. The payment is a defined percentage of your outstanding invoices. When these invoices are collected from your outstanding accounts, the payment goes to the lending provider to pay back the loan amount.

Textbook Definition

Provides a lump sum percentage of the invoice amount with the remainder as a fee.

When to Use

Short-term funding without a debt requirement for payback terms. Although no debt is taken on, the interest is taken as a percent of sales and very high compared to other products.

Type

Secured

Product

Mortgages

Working Definition

A mortgage is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender wherein the borrower receives cash upfront then makes payments over a set time span until they pay back the lender in full. The amount, timeline, and payment terms are determined by your lending provider based on credit history.

Textbook Definition

A mortgage is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender wherein the borrower receives cash upfront then makes payments over a set time span until they pay back the lender in full.

When to Use

Long-term funding for property and/or real estate purchase. The property operates as the collateral asset.

Type

Secured

Product

CSBFL

Working Definition

The Canada Small Business Financing Program is a government run financing initiative. It makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. Small Businesses much identify a willing lending provider who will then open the loan and receive a portion of the funding from the government.

Textbook Definition

The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.

When to Use

Businesses that fit the eligibility requirements and are seeking growth funding. The purposes of these grants is to foster business growth in the community.