In recent years, the number of instant approval loans in Canada has more than doubled, with 4% of Canadian households using payday loans. These and other short-term loans are popular among those who need urgent funds or have been turned down by traditional banks due to their creditworthiness.
However, the uptick in same-day loans is not limited to a personal capacity. Many businesses are also exploring this form of digital borrowing to tide them over until cash flow balances out again. If you have been considering a fast personal loan or an instant approval loan for your business, you’ve come to the right place.
Today’s blog explores what instant approval loans in Canada are, their benefits and drawbacks, the different types, top providers, and how to apply for one. Armed with this information from the experts at Bizfund, you’ll better understand why instant approval loans are so popular and what your next steps should be.
What Are Instant Approval Loans?
An instant approval loan is a financing solution that offers a fast lending decision and funds within a few hours to a few days. These loans are short-term and high-cost, but many find them helpful because the entire process from application to financing can be completed online.
What are the Types of Instant Approval Loans?
There are many types of instant approval loans available in Canada to individuals and businesses. However, it’s essential to know that most instant loans don’t offer large sums of money, especially for personal finance.
With this in mind, here are a few of the types you can explore if you’re looking into fast personal loans or a loan for business needs:
- Instant Personal Loans: You can get an unsecured personal loan approved quickly and funded within hours, depending on where you apply. However, approval for a personal loan depends on your credit score, repayment history, and income.
- Lines of Credit: A line of credit lets you withdraw up to a specified limit and is available to businesses and individuals, secured or unsecured. This type of loan usually comes with fast online approval when taken out with a bank you are already banking with. You also only pay interest on the amount borrowed.
- Merchant Cash Advances: Although technically not a loan in the traditional sense, merchant cash advances (MCAs) are still a same-day to two-day funding option. These advances are based on your business’s projected future sales, and you can get more than $10,000 in near-instant funding with companies like Bizfund.
- Payday Loans: Payday loans are arguably one of the most common small, short-term, instant loans in Canada. These loans are usually offered up to $1,500 and must be repaid on the next payday. Although they provide fast approval and funding, they come with incredibly high interest rates and fees.
- Cash Advance Apps: Apps like KOHO, Bree, Nyble, and iCash offer small, same-day financing. They usually also offer flexible repayment terms and perform minimal credit checks, but can be expensive in terms of fees.
There are also emergency and bridge loans on offer for those with sudden expenses. Some lenders and credit unions offer these as same-day or next-day funding.
Pros and Cons of Instant Approval Loans
As with traditional loans, instant approval loans in Canada come with their own set of pros and cons. Below, we’ve shared these advantages and disadvantages so you know what to look forward to and the risks to bear in mind:
Pros
- Convenient Application Process: Applications are often completed online and are simple and fast, making it convenient to apply for money from anywhere, at any time.
- Fast Funding: Instant loans can provide money when you need it most, in a matter of hours or days, which is particularly helpful in times of emergency.
- Broadly Accessible: Those with poor or fair credit and those with good or excellent credit can apply for instant approval loans in Canada. In fact, some instant lenders do not require a credit check at all or only a minimal one, making it a good option for many.
- No Need for Collateral: You don’t need to use any collateral like your home, car, or other assets to qualify for instant approval loans in Canada.
- Helps Build Credit: Those without a credit history or a poor one can build their credit with an instant loan if payments are made on time and reported to credit bureaus.
Cons
- High Interest Rates: Unfortunately, the cost of borrowing is usually extremely high with most same-day loan lenders. Most interest rates fall between 9.99% and 34.95% or more.
- Limited Funding: Same-day financing often has low borrowing limits, so it might not be enough to cover the full extent of an emergency or the funding needed.
- Aggressive Repayment terms: Most instant approval loans, especially payday loans, have very short repayment terms with lump-sum payments due within 30 days.
- Debt Cycle Risk: Since some instant approval loans can have an annual percentage rate of about 400% these loans can trap borrowers in a debt cycle when they cannot repay the whole loan and are forced to ‘roll it over.’
Top Providers of Instant Approval Loans
If you’re considering an instant approval loan like many others in the age of same-day funding, you’ll want to learn more about the top providers in this space. Have a look below to gain insights into which companies might be worth exploring based on your needs.
Bizfund
If you’re a small business or self-employed and need instant access to funding for working capital, equipment, marketing, or business growth, you might want to consider Bizfund. This US-headquartered company has been helping businesses in Canada for years with merchant cash advances ranging from $10,000 to $300,000, with approved businesses receiving funds within 24 to 48 hours.
The application process can be done online and is quick and easy. Bizfund doesn’t rely too heavily on credit scores but rather on an assessment of your recent business revenue and performance. To be eligible for a Bizfund merchant cash advance loan, you need to have an active business that has a steady income and be able to provide recent bank statements.
iCash
Those looking for instant approval 24/7 payday or personal loans can check out iCash, the money app. This option is best suited to those who want minimal paperwork and a loan of up to $1,500. Since the entire online application process can be done by simply filling out a quick form, applicants can receive an automated decision within minutes.
Then, if approved, funds typically appear within five minutes through Interac e-Transfer. What’s more, eligibility is flexible, as iCash accepts applicants regardless of their creditworthiness, as long as they have a steady income and an active Canadian bank account.
Magical Credit
When you need a little more money and want to take out an instant personal loan, you should look into Magical Credit. This company offers personal loans to borrowers with fair or poor credit of between $1,500 and $20,000. The application process is easy and only takes about 5 minutes, and approvals are usually granted within 24 hours.
If you are approved, you should receive funds directly into your bank account. However, to qualify, you must be a Canadian resident and have a stable income, whether you are employed, on a pension, or receiving government benefits. You will also need a valid ID.
How to Apply for an Instant Approval Loan in Canada
Here’s a quick look at how to apply for an instant approval loan in Canada:
- Meet Requirements: Make sure you meet the eligibility requirements, which vary by lender. Often, you’ll need to be at least 18 or 19 years old, a Canadian resident with a permanent address, receiving a stable income, and a holder of an active Canadian bank account.
- Choose a Lender: Next, choose an instant approval loan lender based on your needs. Just be sure to choose a reputable company and read the fine print on fees and interest rates.
- Complete the Online Form: Once you’ve selected a lender, complete their online form by filling in your personal and financial details or business details, and input how much you hope to borrow.
- Verify Your Bank Account: Most lenders will use secure online bank verification to confirm your identity and income. So be ready to connect your bank account through the lender’s secure portal.
- Review and Sign: If you’re approved, all that’s left is to review and sign the digital loan contract.
The Key Takeaways
Basically, instant approval loans are on the rise, with individuals and businesses interested in this form of financing. Yet, these loans are not without their risks, but for most, the advantages outweigh the drawbacks.
If you’re considering an instant approval loan in Canada, we hope that the top providers we shared and the details surrounding these loans help you make an informed decision. And if you’re a business that needs instant financing, you might want to consider Bizfund above the others. You can learn more about us here or apply here.
