Over 80% of Canadian small businesses reported needing external financing in 2024. But choosing the wrong kind of financing can cost you more than just higher interest.
Business Line of Credit (LOC)
Think of it like a credit card for your business—you borrow only what you need, when you need it. Interest applies only to what you use, not your full limit.
Term Loan
You get a chunk of money upfront and pay it back over time with fixed payments. Easier for budgeting since the amount, interest, and timeline are all locked in.
Which One's Right for You?
Choose a LOC if: Managing short-term cash flow, dealing with seasonal highs & lows, need flexibility.
Choose a Term Loan if: Making a one-time purchase, need predictable payments, expanding or renovating.
Why LOCs Aren't for Everyone
Banks and lenders want to see: solid revenue history (2+ years preferred), clean financial records, and a decent credit score (680+).