Understanding what lenders actually look at when evaluating your application — and how to put your best foot forward — can be the difference between approval and rejection.
What lenders actually look at
When you apply for a business term loan in Canada, lenders are evaluating your ability and willingness to repay. Understanding their decision criteria — and preparing accordingly — can dramatically improve your approval odds.
The four pillars lenders assess are: your credit profile (both personal and business), your time in operation, your annual revenue, and your ability to service the debt based on cash flow. Most banks require 2+ years in business and $500K+ in annual revenue. Alternative lenders are more flexible — often approving businesses with 6 months of history.
Credit profile
Your credit score matters, but it is not the only factor. A business with strong revenue growth and consistent bank deposits can offset a mid-range credit score. Before applying, pull your personal credit report and look for any errors that could be dragging your score down.
Documentation that closes deals
Prepare at least 3–6 months of business bank statements and, if possible, your most recent year-end financial statements. Lenders want to see consistent deposits and a pattern of positive cash flow — not just a profitable P&L from your accountant.
Clarity of purpose
Finally, clarity of purpose helps. Knowing exactly what the loan is for — buying inventory, expanding a location, hiring staff — and being able to articulate how it will generate a return gives lenders confidence that you have thought it through.
lendflo Team
Business Financing Specialists
