Term Loan

All you need to know about small business funding in Canada.

A term loan is the most common type of business loan in Canada offered by banks and lenders. Simply put, these loans allow you to borrow a lump sum of money and repay it over a fixed period of time with regular payments. Oftentimes, it is one of the best ways for small and medium businesses to get the funding they need.

When You Want Full Control

Unlike a merchant cash advance that you repay with a percentage of your daily sales, a term loan is a fixed daily installment. This gives you even more control over your finances, allowing you to plan for the daily remittance and budget appropriately. What’s more, you know the date that you will make your final payment up front. This means that you can plan for additional financing if necessary. There is no penalty for repaying your loan early.

When to Choose a Term Loan

Because term loans have a more stable repayment structure, small businesses can often borrow more money with this type of product than they can with a merchant advance. Term loans are excellent for covering all of your business needs, including:

  • Purchasing inventory

  • Remodeling your retail location

  • Opening another retail location

  • Purchasing equipment

  • Obtaining funds for accounts payable

Term Loans by the Numbers

You can borrow between $50,000 and $300,000 with a term loan, and you have the option to repay it over the course of six, nine, or 12 months. The shorter the repayment term, the higher your payments will be, but the less interest you will pay over time. Conversely, the longer the repayment term, the lower your payments will be, but the more interest you will pay over time. Despite the fact that the repayment schedule is fixed, term loans give you the opportunity to set up a repayment plan that works for you from the very start.

How to Apply

Applying for a term loan is easy. Just provide some basic information about your business, your merchant ID number, a government-issued photo ID, a void cheque, and your most recent bank statement. All of this information will be used to determine whether you qualify and, if you do, how much money you qualify to receive. You will also need to open a business bank account in order to receive the money from your lender.

Term Loans and Your Credit

Whereas a merchant cash advance does not appear as a trade line on your credit report, a term loan does. This means that if you want to establish or rebuild your credit, a term loan is a great choice. In fact, even if you have bad credit, you are not immediately disqualified. You may be asked to provide a cosigner, or you may be offered a different product with different pricing terms.

If you are interested in obtaining a term loan, Thinking Capital can get you qualified. Just fill out the short application, and find out how much funding your business can receive. That’s all there is to it, and you can get the money in as little as 24 hours.