Have you been looking for ways to finance a small business in Canada? You’re not the only one. Despite what might be popularly believed, many small businesses in this nation rely on funding. Some companies even go so far as to combine funding options. There are many reasons for this, but often it’s to improve cash flow management, expand operations, fund day-to-day expenses, or secure much-needed equipment.
If you’ve found yourself in a bit of a pickle and need funding to meet your business’s needs, you’ve come to the right blog. Our team at Bizfund shares the 10 proven ways to finance a small business in Canada in 2026. We also share how to combine small business funding to maximize financing as your business continues to grow.
Loan Options
- Traditional Bank Term Loans
Traditional bank term loans usually offer your business a large lump sum that you will have to pay over a fixed period of time. Although you could secure a relatively high amount, the biggest roadblock is approval.
Unfortunately, approvals for bank term loans depend on several factors, including credit score, proof of consistent financials, and financial projections. In addition, even with strict criteria, approval timelines can be slow. This can be frustrating when you need funds quickly to expand operations or when an emergency arises.
However, if you secure approval, the funding can support long-term small-business investments, especially when loans range from tens of thousands to several million dollars.
- Business Lines of Credit
If you want the capability to borrow only what you need, which many businesses prefer, a business line of credit could be a good idea. Many people prefer business lines of credit because interest is only charged on the amount a business uses.
Additionally, business lines of credit typically offer high limits, ranging from $10,000 to $250,000. With funds like these, you have access to cash when you need it most. This means you could use a business line of credit to cover short-term expenses, manage cash flow fluctuations, or unexpected costs. However, this type of financing is best suited to businesses with predictable revenue.
- Credit Cards and Owner Financing
In the early stages of growing your small business, you may only need short-term funding. If this is the case, you don’t want to anchor yourself with large loan repayments that can leave you treading water for the foreseeable future. But what is the solution? Well, it could be getting a credit card or considering owner financing.
Credit cards and owner financing are two of the best ways to finance a small business. With a credit card, you gain access to fast funding for inventory, operating expenses, or emergencies. However, the biggest downside… yes, there is one… is that they carry higher interest rates. This means you need to be very careful in how you use them to avoid long-term debt.
Then, when it comes to owner financing, this involves using loans, personal savings, or home equity to fund your business. With this approach, you have complete control, and you can avoid lender restrictions, but there is a catch. The catch is that it places your personal assets at risk. Regardless, both options can be beneficial to startups or those looking for bridge financing.
Government Grants and Public Funding
- Federal and Provincial Grant Programs
One of the first places small businesses in Canada should look for funding is government grants and public funding. If you gain approval for a grant, you often don’t need to pay back the funding you receive. However, you will only secure a grant if your business initiatives, such as sustainability, innovation, hiring, or regional development projects, meet the grant’s criteria.
The upside is that if you meet the criteria and gain approval despite the often lengthy process, you could access anywhere from a few thousand dollars to six figures. In many situations, federal and provincial grants can support a business’s long-term goals.
- Tax Credits and Wage Subsidies
If you don’t want to go the loan route, you can explore tax credits and wage subsidies. These can help you reduce your business expenses without requiring upfront cash or taking on debt. Some examples of tax credits and wage subsidies include training or research credits and hiring incentives. However, to receive these, you must meet the qualification criteria.
Alternative Financing and Modern Lending
- Working Capital and Short-Term Financing
When it comes to alternative financing, working capital and short-term financing are popular choices. These are some of the best ways to finance a small business if you need to cover various advertising expenses, payroll costs, or inventory. Funds typically range from $5,000 to $250,000.
Although not for everyone (and that’s okay), these financing solutions can be ideal for businesses facing timing gaps between revenue and expenses. As a result, businesses experiencing sudden growth and seasonal businesses typically benefit most.
- Invoice Financing
If you have a business that processes many invoices every month and most of your earnings are tied up in them, it may be time to consider invoice financing.
Technically, with invoice financing, you’re not funding an established company; you’re simply bridging the gap by accessing a portion of the invoice value upfront. With this type of funding, you’ll receive the remaining invoice balance when a client pays, but fees will be deducted.
- Merchant Cash Advances
When you need flexibility, you may very well need a merchant cash advance. Merchant cash advances can be an invaluable way to finance a small business because you get access to fast funding within a day or two. You also have access to financing ranging from $10,000 to $300,000, and eligibility is less strict than for other forms of funding.
In addition, merchant cash advances don’t require monthly repayments. But don’t get too excited. You will need to pay back the money you borrow daily or weekly with future debit or credit card transactions. With this in mind, it’s usually a good choice for companies that have consistent card volume.
Asset-Based and Alternative Capital Sources
- Equipment Financing and Leasing
Some businesses in Canada need to finance vehicles, technology assets like computers, and machinery. If you’ve found yourself in this boat, equipment financing or leasing may be worth considering. With equipment financing, you’ll use the equipment you secure as collateral, and the amount you can borrow depends on the asset’s value.
In contrast, leasing allows you to preserve cash and upgrade over time, but you may incur much higher costs than buying outright. So think about your decision carefully before applying for either option.
- Crowdfunding
It may not be the most reliable funding source or the easiest way to finance a small business, but crowdfunding is an option. There are plenty of sites like GoFundMe that allow you to use an online platform to raise money for product launches, creative projects, or service-related businesses. In Canada, millions of people use these platforms to donate or invest, so it’s a strong opportunity to build brand awareness.
Funding Strategies: Combining Funding Sources
When we talk about combining funding sources, we mean using multiple types of financing simultaneously for different business purposes. This means that instead of relying on a single loan type, you could use a short-term loan to cover day-to-day expenses and equipment financing to access the specialized tools you need.
Another example is to layer tax credits or wage subsidies with grants or a merchant cash advance to address different needs. If you plan well, you can maximize your funding potential and better meet your small-business goals.
Tips for Success
Now that you know there are many ways to finance a small business, you need to learn a few simple tips. The tips below will help you get a step closer to successfully securing the financing you need for your small Canadian business:
- Try to build your financing plan around when you receive funds and when funds leave your account. You want funding to support these cycles, not work against them.
- Don’t use short-term funding for long-term needs. Funding options such as MCAs, invoice financing, and working capital are tools for addressing timing gaps; use them solely for short- to medium-term gains.
- Try to stress test repayments before you commit. To do this, you can try to simulate how a repayment would feel during a slower month or a seasonal dip. Depending on your results, you’ll have a good indicator of how much is too much to borrow.
Key Takeaways on the Ways to Finance a Small Business
Evidently, you have quite a few options when it comes to financing your small business in Canada. We hope the many ways to finance a business we discussed have helped you identify which funding solution is worth exploring further.
However, if you already believe a merchant cash advance is your best option, you can apply with us at Bizfund. We serve businesses across industries and are always available to discuss how we can help when you’re ready.
