Is a Term Loan, Line of Credit, or CSBFP Best for Your Canadian Business in 2025?
If you're deciding between a term loan, a line of credit, or a CSBFP-backed loan in Canada, this guide breaks down pros, cons, and fit—whether you're a small mom-and-pop shop or a growth-focused startup. For the complete overview, read Types of Business Loans Available in Canada in 2025.
Loan Types Demystified
Term Loans
Term Loans offer lump-sum financing with fixed repayment, perfect for major investments, but require credit or collateral. Ideal for projects like equipment or facility upgrades, greenboxcapital.ca.
Lines of Credit
Lines of Credit provide flexible access to funds, draw, repay, repeat. Interest only charges on what you use. A go-to for managing payroll, inventory, or seasonal dips Bizfundgreenboxcapital.ca.
CSBFP Loans
CSBFP Loans give small businesses a fighting chance by allowing loans up to $1 million backed by the government. Great for lower credit profiles and access through major banks ISED CanadaAdvance Funds Network.
Compare: Term Loan vs LOC vs Government Loan
| Feature | Term Loan | Line of Credit | CSBFP Loan |
|---|---|---|---|
| Funding Structure | Lump sum | Revolving credit | Structured loan up to $1M |
| Collateral Requirement | Often required | Flexible | Federal guarantee reduces requirements |
| Best For | Capital-intensive projects | Working capital needs | Startups or limited credit |
Quick Tips to Secure Approval
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Clarify your funding need and timeline
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Prepare comprehensive documentation
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Shop around: compare rates and fees
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Apply only to suitable lenders to avoid hard-inquiry damage
Closing Thoughts
The right financing choice depends on your business’s urgency, credit strength, and use case. A term loan offers structure, a line of credit grants flexibility, and CSBFP reduces approval friction.
