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How to Apply for Small Business Loans

open sign in store window after receiving a small business loan

Small business owners across Canada all want to have a healthy amount of cash flow and a robust balance sheet, but reaching these seemingly simple goals is fraught with challenges. Particularly for entrepreneurs with business growth and development in mind, the old adage of “you need money to make money,” rings especially true. 

Without efficient and affordable access to small business financing options, many businesses 

see their daily operations soak up time and money, slowly but surely taking them further and further away from the goals in their business plan. 

To break free of this vicious cycle, small businesses throughout Canada can secure the working capital they need with a small business loan.

How a Small Business Loan Can Help Your Company

Through a small business loan, companies can address all sorts of business needs, such as purchasing new equipment, expanding or relocating, stocking up on inventory or creating new marketing campaigns. 

Specific business needs are unique to each situation, which is why small business loans are such versatile tools. Whether you want to address business needs or seize market opportunities, a small business loan can help. 

Where to Look to Get a Small Business Loan

woman scrolling through small business loan options on her phone

Small business financing is sometimes considered a risky venture by larger financial institutions. For this reason, there are often greater loan requirements imposed on small businesses than individuals. 

In practice, this means that traditional lenders, such as major banks and credit unions, can make the application process quite challenging. Fortunately, today’s marketplace has a diverse array of services for small business financing. The leading options include:

Online Lenders

For a borrower, going through an online lender is unquestionably the fastest and most convenient way to get a small business loan. 

Thanks to quick and easy online loan applications, a borrower can now have their application completed in minutes, and get their funding secured in a matter of hours. Best of all, companies can make use of their new resources as they see fit without pressure, thanks to flexible repayment terms and schedules. 

At Lendified, borrowers can be instantly pre-qualified for loans ranging from $5,000 to $150,000 and have their funds deposited within 48 hours!

Start Your Small Business Loan Application

A Credit Union

Slightly more accessible than the big banks, credit unions still have significant collateral and credit score requirements. Because a credit union is a private institution, applicants must also be members before applying for any kind of short or long-term loan. 

Traditional Banks

Big banks offer so many lucrative financial and credit products to consumers, like high-interest rate credit cards, that financing small businesses is simply not one of their priorities. 

For many companies, securing bank loans requires a high personal credit score, as well as meeting specific collateral demands. For most people, the terms and conditions attached to this kind of loan program make them difficult to access. 

Community Organizations

In small and large communities across Canada, there are a number of non-profit organizations and community loan funds that help local start-ups and small businesses at the grassroots level. These groups tend to be very accessible and helpful, but they rarely have access to significant sources of capital, so their loans tend to be small. 

Friends & Family

Your friends and family want to help you succeed, which is why it might be tempting to ask them for financing help, but there are lots of reasons why business and family don’t mix. If things don’t go as hoped, it could put you or someone you care for in an uncomfortable position. This should be your last resort for a small business owner.  

Build a Strong Foundation for Your Loan Application

concrete pillars demonstrating the importance of having a strong foundation for a small business loan application

Developing a strong small business loan application is the best way to maximize your chance of approval. As you prepare your application, remember that any lender will want to be able to get a clear understanding of your credit history, your current business, and what you plan to do with your new financing.  

Each particular lender will have their own documentation requirements, but you can avoid surprises by making sure you have supporting documents necessary to paint a complete picture of your business and future goals. 

What Do You Need To Apply For A Small Business Loan?

piles of paperwork for a traditional small business loan application

Business Plan

A clear and detailed business plan helps lenders understand your company’s posture, vision and challenges. No matter how long you have been in business, demonstrating how a loan will help your company is a key component of any loan application. 

If, for example, you are applying for construction business loans, potential lenders will want to know the type and scale of projects you hope to accomplish with your new funding. 

Bank Statements, Income Statements & Balance Sheet

In order to get a complete understanding of your company’s finances, other lenders will often want to see as much financial documentation as possible. These documents typically include your business banking statements and balance sheet to get a sense of your income, liabilities and cash flow status. 

For loan applicants in the service industries, lenders will want to see how your business fluctuates with the seasons before approving restaurant loans

Tax Returns

Your lender could require that you provide tax return history in order to make sure that there are no discrepancies with other forms of financial reporting. 

Personal Financial Documents

Some lenders will want to know more about your personal credit history in order to evaluate your creditworthiness. A strong personal credit score and clear credit history will go a long way to helping get your application approved. 

Need a Small Business Loan in a Hurry? Go Online

open laptop, ready for an online small business loan application

Going online for your small business loan is the best approach for people who either need funding as quickly as possible or don’t have the requisite collateral to qualify for small business loans from a bank or credit union. 

Online lenders offer financing at a similar cost to other institutions but with far greater efficiency and flexibility. Although interest rates are likely to be slightly higher than some other loan products, the convenience and availability of this kind of small business financing more than makes up for the added cost.

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About the Author



Lendified is Canada's premier online lender for small businesses. The company was founded by former bank executives dedicated to provide businesses with fast, easy, and affordable financing. The Lendified team regularly produces blogs and guides to help small business owners succeed.

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