Getting a business loan without assets in Canada is harder than it should be. Maybe you rent your space, maybe your equipment is leased, or maybe you’re running a service based business where there’s nothing physical for a lender to hold onto. Banks want property or equipment or something they can seize if you stop paying and if you don’t have any of that most of them won’t even look at your application.
Why Banks Want Assets
Banks want security. A building, equipment, vehicles, inventory. Something with value that protects them if the loan goes bad. They also want a personal guarantee putting your personal property on the line too.
A lot of small business owners in Canada just don’t have that. They don’t own commercial property. Their equipment is financed or leased. They’re running a consulting firm or a marketing agency or a cleaning company where the value is in the people doing the work. Banks don’t have a good process for evaluating that kind of business so they decline it.
Government Options for a Business Loan Without Assets
Before looking at alternative lenders it’s worth knowing what government programs exist. The Canada Small Business Financing Program offers up to $1 million for real estate and leasehold improvements and up to $350,000 for equipment. Your business needs to be for profit, registered in Canada, and have annual revenue under $10 million. BDC also offers working capital and market expansion loans that sometimes don’t require collateral if your cash flow is strong enough.
Both options are slow though. Government backed loans go through banks and the approval process takes weeks. They also don’t cover day to day expenses like payroll, inventory, or a cash flow gap you need to fill now. For that you need something faster.
How to Get a Business Loan Without Assets in Canada
Alternative lenders like Canada Capital fund businesses based on their revenue. You get an advance on your future receivables with a fixed cost and daily or weekly repayment over a set term. No assets pledged, no personal guarantee. Our small business capital page has more detail on how the product works and what terms look like.
If you want to understand how this type of funding works in practice we wrote a full breakdown in our post on how does revenue based financing work.
What Lenders Look at When There Are No Assets
Without assets to evaluate lenders need to look at other things. What we look at:
Monthly revenue and how consistent it is. A business doing $30,000 every month is a different conversation than one doing $80,000 one month and $5,000 the next. Consistency matters more than peak numbers.
Time in business. Longer history gives us more data. Six months of solid revenue is usually enough to get started but two or three years of history makes the decision easier.
Industry. Some carry more risk than others. We work with most but there are a few we don’t touch like cryptocurrency.
Credit. We look at it but it’s not what makes or breaks the deal. Unlike a bank where your score can end the conversation before it starts, revenue based financing is built around your sales. Strong revenue with a rough credit file can still get approved. We go into more detail on how this works in our post on what is revenue based lending.
What Documents You Need
Recent bank statements going back three to six months. Business registration showing you’re legally operating in Canada. A voided business cheque for the account you want funds deposited into. Basic info about your business and what you need the capital for.
That’s the starting point. Larger deals need more but to get the conversation going and find out if you qualify that’s all we need.
A Real Example
A good example of how a business loan without assets works in Canada is a cleaning company we funded in Ontario. They had been operating for two years doing $45,000 a month in revenue. They landed a contract with a commercial property management company that would add $25,000 a month but needed to hire and train eight new staff members before the first payment came in.
No property. Equipment was basic and leased. The bank said no because there was nothing to secure the loan against. They came to us, we looked at two years of consistent revenue and the new contract, and funded them $38,000 within 48 hours. They brought on the staff, delivered on the contract, and had the advance paid back within four months.
What Happens if You Default
If you default on an unsecured business loan you won’t lose business assets since you didn’t pledge any. Your credit score takes a hit though and that makes future funding harder to get and more expensive when you do. If you signed a personal guarantee anywhere in the deal your personal assets could be at risk. We don’t require a personal guarantee but it’s worth understanding whenever you take on any type of business funding.
What Can You Use a Business Loan Without Assets For
Payroll, inventory, equipment, hiring, marketing, renovations, covering a slow stretch, putting a deposit on a new project. If you need ongoing access to funds rather than a lump sum a business line of credit might suit you better. We compare how the two work in our post on revenue based financing vs bank loan.
What It Costs
More than a bank loan. No assets backing the deal means more risk for the lender and the pricing is higher. We show you the total cost, payment amounts, and term length before you commit. Nothing changes after you sign.
Credit and Qualifying
We don’t treat credit as pass or fail. A business doing strong sales with a rough credit history can still get funded. We’ve approved business owners six months into their first year and businesses that have been running for over a decade. The common thread is revenue coming in consistently month over month. More on how we look at business funding based on your sales in our post here.
Apply for a Business Loan Without Assets in Canada
Fill out our short application at canadacapital.ca/apply-now and someone from our team will reach out. We’ll go over what you qualify for and what the numbers look like before anything is signed.
