Private business financing in Canada: who the lenders are, and what to check first.

Before going private, it is worth knowing what the public and bank side offers. The Canada Small Business Financing Program is a federal program where banks and credit unions make the loans and the government covers part of the lender's losses. Businesses with gross revenue of $10 million or less can use it for equipment, leasehold improvements and working capital, with interest capped (for example, prime plus 3% on variable-rate term loans and prime plus 5% on lines of credit) and a 2% registration fee. BDC offers a small business loan of up to $350,000 online for expenses, supplier payments and inventory, and looks for a registered Canadian business, documented revenue, good credit and a business bank account. If you fit those, they are hard to beat on price.

Who private lenders are

“Private lender” covers anyone who is not a bank, credit union or government lender. In practice that means a few quite different groups:

Each group lines up with a product you can read more about: term loans, lines of credit, revenue-based financing and invoice financing. If you want to keep equity and avoid debt altogether, see non-dilutive funding.

What a private lender actually reviews

A bank asks whether your business has been profitable on paper. Most private lenders ask a narrower question: can the money coming into your account comfortably carry a new payment? That shifts the weight toward:

• Bank statements. Several months of deposits, average balance, and how often the account dips below zero.
• Existing payments. Other loans or advances already being taken from the account.
• Time in business and revenue. Thrivewell reviews against at least 6 months in business and about $10,000 in monthly revenue. Those are review criteria, not a promise of approval.
• Credit, but in context. It still matters, but a weak score with strong deposits is not an automatic no the way it can be at a bank. Our guide to business loans with bad credit goes deeper.
• Industry. Some funders prefer certain sectors. A restaurant with daily card sales looks different from a construction company paid on progress draws.

How private pricing and terms differ

This is where most surprises happen. Bank loans are usually quoted as an annual interest rate over a term of years. Private offers can be quoted in several other ways:

• Factor rate or fixed payback. Instead of interest, you agree to repay a set total.
• Shorter terms. Months rather than years, which makes each payment larger.
• More frequent payments. Daily or weekly withdrawals as well as monthly ones.
• Fees. Origination, administration or broker fees that may come out of the amount you receive.
• Security. A registration under your province's personal property security law, and often a personal guarantee.

Both short and longer structures are common. Of 126 Canadian fundings in Thrivewell's records with a readable term, 84 had terms stated in months or years and 42 in days or weeks. The actual lender written terms govern every deal, so read the schedule in the agreement rather than relying on a summary.

Warning signs in a private offer

Any one of these is a reason to slow down and ask questions before signing:

A legitimate funder will give you the agreement to read, answer questions about it, and accept that you might show it to your accountant or lawyer. If you are comparing a merchant cash advance specifically, that guide walks through how holdback percentages and remittances work.

Where Thrivewell fits

Thrivewell is a Canadian business funding marketplace. We are not a bank and we are not a government program. You fill out one application and we look for offers from our funding partners, and the lender's written terms govern whatever you accept. We have placed Canadian fundings with more than 15 different funding partners. A single application can be reviewed by several of them, so if more than one offer comes back you can compare them instead of taking the first one.

Most requests are smaller than people expect. Canadian fundings in our records ranged from $2,500 to $250,000, and about a quarter (55 of 215) were under $10,000. That is history, not a limit or a promise; what any business can get depends on its numbers and the funding partner's assessment.

On timing, the median for 126 first-time Canadian fundings was 11 days from the first record in our system to funding, and a quarter funded within 5 days. That is not a promise. It depends on how quickly documents arrive and on each partner's review.

Before you sign: a five-minute check

1. Write down the amount you receive after fees, not the headline amount.
2. Write down the total you will repay and the date of the last payment.
3. Multiply one payment by the number of payments and confirm it matches that total.
4. Check your slowest month of deposits against the payment schedule.
5. Find the clauses on prepayment, default, security and personal guarantees, and make sure you understand each one.

Private business financing FAQ

Is private financing always more expensive than a bank?

Usually, yes, because the lender takes on more risk or moves with less paperwork. That is why the bank and program routes above are worth trying first when you have time and a strong file.

Will applying hurt my credit?

It depends on the funder and the type of credit check. Ask before you consent, and avoid sending the same file to many funders on your own, since a marketplace application can reach several partners at once.

Can I move to a bank loan later?

Often that is the plan. Use the private money for the short gap, keep your books current, and apply to a bank once your statements show the result. Check the prepayment terms first so you know what an early payoff costs.