• Home
  • Blog
    • Business Partner Magazine Archive
  • Free Contests and Giveaways
  • Resources
  • About Us
    • Cookie Policy
    • Disclosure Policy
    • Privacy Policy
    • Terms of Website Use
  • Contacts

Business Partner Magazine

Tips and advice for entrepreneurs, start-ups and SMEs

  • Business Success
  • Marketing
  • Finance
  • Employees
  • Technology
  • Start-up
  • Productivity
  • Communication

Small Business Loan Basics: Definition, Types, Eligibility, and Sources

December 23, 2021 by BPM Team

Click here to get this post in PDF

Too long to read? Enter your email to download this post as a PDF. We will also send you our best business tips every 2 weeks in our newsletter. You can unsubscribe anytime.

Enter your NameEnter your Email Address
Man signing a contract paper beside the money paper bill

As a small business owner, when you are starting a new venture or planning for expansion, you need to access capital in order to fund your business. Loans certainly play a key role in the lifeblood of small businesses in Canada. In this article, we will explore how a small business loan works and how you can avail of it to fund your venture.

Definition and Purpose of Small Business Loan

A business loan is a form of debt incurred by small businesses. Financial institutions, government, or some kind of corporation usually act as a lender and advance a sum to the borrower. The money is given to the borrower under some terms, finance charges, interest, repayment terms, and other conditions. 

Purpose of Small Business Loan

To support their operations or expansions financially and to purchase fixed assets, most small businesses need to apply for a loan. This could include anything from supplier payments, tax payments, staffing, marketing, renovations, inventory, upgrading equipment, cash flow, vehicles, etc. 

Different Types of Small Business Loans

Based on the need for collateral, loans are divided into Secured Loans and Unsecured Loans. 

Secured Loans- A loan that is secured with collateral or an asset is called a secured loan. A borrower could use property, stocks, or bonds for collateral. A secured loan offers a higher borrowing amount with low-interest rates and longer repayment duration. 

Unsecured Loans- Unsecured loans do not require the borrower to have collateral for security. However, they will need you to have a good credit score to avail of the loan. Some examples of unsecured loans are education loans, credit card purchases, and personal loans. 

What are the costs of a small business loan?

Generally, the cost of the loan is determined by the amount the lender will charge. 

Person signing in an approved loan document

Qualifying for a small business loan in Canada

The borrower will need to submit various documents to verify for an Icapital Small Business Loans.

Business Plan- If you are applying for a small business loan, then you will need to provide a detailed plan on how you intend to use the proceeds by providing the lender with a copy of your business plan. It will help you gain the lender’s trust. 

Income Statement- Your income statement shows your expense patterns and your revenue in general.

Bank Statements- It helps the lender understand the cash flow of your business.

Balance Sheet- With the help of your balance sheet, your lender can evaluate your total assets and liabilities.

Tax Returns- Your tax returns work as proof that your claimed income is the same as reported with the CRA. In case any discrepancies are found, you may risk your application approval.

Personal Financial Documents- To understand your financial health, some lenders may want to see your credit report. 

Other documents such as information about the assets to be purchased, a copy of your sales contraction agreement, your resume, etc. 

Where Can You Get a Small Business Loan in Canada?

Credit Unions– Credit Unions are a type of non-profit financial institution controlled by their members and the people who deposit their money in them. It often offers better rates on loans than a traditional bank.

Traditional Banks- The private and government banks serve as a common source of capital for small businesses.

Community Loan Funds- Community loan funds are offered by non-profit organizations to support local initiatives and foster entrepreneurship in the community.

You may also like: Everything to Know about Business Loans

Filed Under: Finance Tagged With: business loans, finance

  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • Twitter
  • YouTube

Disclosure

We earn commissions if you shop through the links on this page.

Recent Posts

  • Why Your Marketing Strategy Isn’t Resonating: Top 6 Pitfalls
  • Navigating the Future: A Guide to Choosing the Right Innovation Management Software
  • Swiss Banking and Montenegro Business: The Global Entrepreneur’s Guide
  • Tamper Proof Packaging: Safeguarding Your Products and Brand Reputation
  • Unlocking a Secure and Unconventional Retirement: Insights from an Expert’s Book

Categories

Archives

Make Money Online – Free Course

  • Discover All The Shortcuts To Affiliate Marketing Success
  • Find Out How To Fill Your Site With New Leads And Customers
  • Discover How To Turn Your Passion Into Profits
  • Learn How To Write Copy That Gets Results Fast!
  • Discover How To Create Promote & Sell Your Own Products Online
  • Everything You Need To Know About Marketing Money Online
  • Strategies For Successful Web Entrepreneurs Inside
  • Discover How To Invest Smarter Grow Faster And Retire Rich
  • Email Marketing Strategies For Marketers And Entrepreneurs
  • Free training reveals how to build a successful six figure income online
  • Discover The Mindset Hacks You Need To Succeed
  • Free Marketing Memberships – Make Money Online

    Make money online free marketing memberships

    Tags

    Accounting apps bitcoin brand business growth business skills business success communication cryptocurrency Customer Service Data design Digital marketing ecommerce Efficiency employees Featured Article finance finances Health and Safety infographic insurance Investing investment legal legal tips Management Marketing marketing strategy Outsourcing productivity property Real estate sales security SEO Social Media software starting a business startup Technology Trading Training website workplace

    Disclosure

    We earn commissions if you shop through the links on this page.

    Digital Marketing Agency

    ReachMore Banner

    Business Partner Magazine

    Business Partner Magazine provides business tips for small business owners (SME). We are your business partner helping you on your road to business success.

    Have a look around the site to discover a wealth of business-focused content.

    Here’s to your business success!

    Copyright © 2023 - Business Partner Magazine·