💼 Separate Personal & Business Finances
KOHO is popular with Canadian freelancers and sole proprietors as a no-fee account for tracking business income. Keep your finances clean — open a free account today.
Get KOHO Free — Code 45ET55JSYA
Business Line of Credit Rates — Canada 2026
| Lender | Rate (Approximate) | Limit Range | Secured/Unsecured |
|---|
| RBC | Prime + 1–3% | $10K–$1M+ | Both available |
| TD | Prime + 1–4% | $10K–$500K | Both available |
| BMO | Prime + 1.5–3.5% | $10K–$750K | Both available |
| BDC | Prime + 3–5% | $10K–$500K | Unsecured & secured |
| Scotiabank | Prime + 2–4% | $5K–$250K | Both available |
| OnDeck Canada | Varies (higher) | $5K–$300K | Unsecured |
Bank of Canada prime rate: As of early 2026, the Bank of Canada prime rate is approximately 5.2%. A business line at prime + 2% equals approximately 7.2%. Rates fluctuate — verify current rates directly with lenders.
What Is a Business Line of Credit?
A business line of credit (LOC) is a revolving credit facility — similar to a credit card but with higher limits and lower interest rates. Unlike a term loan (which you receive as a lump sum and repay on a fixed schedule), a business line of credit works like a pool of available credit:
- Borrow only what you need, when you need it
- Repay and re-borrow up to your credit limit
- Pay interest only on the outstanding balance
- No prepayment penalties (typically)
- Annual renewal (lender reviews your account yearly)
For Canadian small businesses, a line of credit is the most versatile financing tool — ideal for managing seasonal cash flow gaps, funding inventory purchases before a busy season, bridging the gap between delivering services and receiving payment, or covering unexpected expenses.
Secured vs. Unsecured Business Lines of Credit
Unsecured Business Line of Credit
No collateral required. Approval based on creditworthiness, business revenue history, and relationship with the lender. Limits typically $100–$250,000 for small businesses. Rates are higher (prime + 2–5%) to compensate the lender for the additional risk. Processing time: 1–2 weeks with an established banking relationship.
Secured Business Line of Credit
Collateral required — commonly real estate (commercial or residential), equipment, inventory, or accounts receivable. Limits up to $1M+ depending on collateral value. Rates are lower (prime + 0.5–2%) due to reduced lender risk. Processing time: 3–6 weeks (collateral appraisal required).
When to Choose Each
- Unsecured: Short-term cash flow management, established business with strong revenue, quick access needed
- Secured: Larger amounts needed, lower rate a priority, business owns significant assets
How to Qualify for a Business Line of Credit in Canada
Canadian banks typically evaluate business lines of credit applications on the following criteria:
- Time in business: Most banks require 2+ years of operating history. BDC and some alternative lenders extend credit to 6-month-old businesses.
- Annual revenue: Minimum $100,000–$250,000 in annual revenue is typical for unsecured lines at Big 5 banks.
- Business credit history: A business credit report (through Equifax Business or Dun & Bradstreet) showing no derogatory history.
- Personal credit score: For small businesses, the owner's personal credit score (typically 650+) is evaluated, particularly for unsecured lines.
- Business bank account history: Lenders want to see 12–24 months of business bank statements showing consistent cash flow.
- Profitability: Financial statements showing the business generates net income sufficient to service the debt.
Frequently Asked Questions
What is the current interest rate for a business line of credit in Canada?
As of early 2026, business lines of credit are typically priced at Bank of Canada prime + 1–4%, depending on creditworthiness and whether the line is secured. The prime rate is approximately 5.2%, putting most unsecured business lines at 6.2–9.2%.
How long does it take to get a business line of credit in Canada?
With an established banking relationship and complete documentation: 1–2 weeks for unsecured lines. Secured lines requiring collateral appraisal typically take 3–6 weeks. BDC can sometimes process faster for qualified businesses.
Can a new business get a line of credit in Canada?
It's difficult — most banks require 2+ years of history. Options for newer businesses include: BDC's startup financing programs, secured lines backed by personal collateral, the Canada Small Business Financing Program (for equipment/leasehold), and credit union membership with local underwriting flexibility.
Is a business line of credit better than a business loan?
It depends on the use. A line of credit is ideal for recurring cash flow management — you only pay interest on what you draw. A term loan is better for one-time purchases (equipment, renovations) where a fixed repayment schedule and potentially lower rate are preferable.
See also: Small Business Loans Canada · BDC Loans Canada · Best Business Accounts Canada