How do a company apply for a commercial loan with bad credit?
First, you should gather financial statements, bank statements, and revenue reports to understand your current financial position.
Clearly define why you need the loan and how it will benefit your business (e.g., purchasing equipment, expanding operations, or managing cash flow). Reduce existing debts to improve your credit score. Check your credit report for any errors or inaccuracies and dispute them.
Research and Compare Lenders. Larger institutions like RBC, TD, and BMO may have more stringent requirements but can be considered if you meet their criteria. Credit Unions often more willing to work with small businesses and may offer competitive rates.
Platforms like OnDeck Canada, Thinking Capital, and Lendified offer faster approval processes and more flexible criteria.
Gather Required Documentation (Personal and Business Identification, Financial Statements, Tax Returns, Bank Statements, Business Plan).
Fill out the lender’s application form, providing accurate and complete information. Attach all required documents to support your application.
Be upfront about your credit history and provide a compelling narrative explaining how you plan to use the loan and ensure repayment.
If approved, review the loan terms carefully and negotiate for better terms if possible.
Business loan calculations for 3 years (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 500,000 | 6.50% | 50,104 |
| 500,000 | 15.50% | 119,479 |
| 500,000 | 25.50% | 196,563 |
| 1,000,000 | 7.00% | 107,917 |
| 1,000,000 | 16.00% | 246,667 |
| 1,000,000 | 26.00% | 400,833 |
| 2,500,000 | 7.50% | 289,063 |
| 2,500,000 | 16.50% | 635,938 |
| 2,500,000 | 26.50% | 1,021,354 |
| 5,000,000 | 8.00% | 616,667 |
| 5,000,000 | 17.00% | 1,310,417 |
| 5,000,000 | 27.00% | 2,081,250 |
Are there business loans with no credit check?
Yes, there are business loans available in Canada that do not require a credit check, although they are less common and usually come with specific conditions or higher costs:
- Merchant Cash Advances (MCAs) - a lump sum of cash in exchange for a percentage of future sales. Repayments are made automatically as a portion of daily or weekly sales.
- Invoice Financing (Factoring) - when businesses sell their outstanding invoices to a lender at a discount to get immediate cash.
- Equipment Financing - loans specifically for purchasing equipment, where the equipment itself serves as collateral.
- Online Lenders - some online lenders may offer no credit check loans but will instead evaluate the business’s revenue, cash flow, and other financial health indicators.
Can a startup with bad credit scores apply for loans?
Yes, a startup with bad credit scores can apply for loans in Canada, although the options may be more limited and the terms may be less favorable compared to those for businesses with good credit scores.
You can also see the similar FAQ about Canadian banks:
Details of companies offering the financial services:
Alpine Credits
Head office’s address: #310-10524 King George Boulevard, Surrey, BC V3T 2X2
Contact center: 1-800-587-2161
Web-site: https://alpinecredits.ca/
Capital Advance
Head office’s address: 122 Scollard St, Suite 201, Toronto, Ontario M5R 1G4
Contact center: 1-888-326-8239
Web-site: https://capitaladvance.ca/
Greenbox Capital
Head office’s address: 2200 Biscayne Blvd., Ste. 200
Contact center: (855) 442-3423
Web-site: https://www.greenboxcapital.ca
Lending Loop
Head office’s address: 410 Adelaide St W Toronto
Contact center: 1-(888)-223-5667
Web-site: https://www.lendingloop.ca
OnDeck Canada
Phone: (855) 704-7458
Web-site: https://www.ondeck.ca