NEXT FUND · FINANCING GUIDE
How to compare business financing offers in Canada
Put written offers side by side using the same funding need. Compare cash received, total cost, repayment timing and conditions together. A smaller payment or a quoted rate alone does not tell the full story.
1. Identify the financing structure
A term loan provides a lump sum with an agreed repayment schedule. A business line of credit lets you draw within an approved limit and reuse available credit as you repay, subject to the agreement. Match the structure to whether the need is a defined project or a recurring cash-flow gap.
Other products work differently. For a merchant cash advance, review the actual agreement for payment frequency and whether payments change with sales. For invoice factoring, ask about eligible invoices, collection responsibilities and what happens if a customer does not pay. Do not assume every product is a conventional interest-bearing loan.
2. Write down the full offer
Use one comparison sheet for every offer. Ask for unclear or missing terms in writing before deciding.
- Amount approved and the net amount actually deposited after any deductions.
- Interest or other financing charges, all fees and the total amount payable.
- Payment amount, frequency, first payment date and expected term.
- Collateral, personal guarantees and any ongoing reporting conditions.
- Early-repayment conditions, renewal terms and charges for late or missed payments.
3. Check the effect on cash flow
Compare payment dates with when you expect customers to pay you. A monthly total can hide pressure from daily or weekly withdrawals. Work through a quieter period as well as a normal month, alongside payroll, rent, supplier payments and existing financing obligations.
For a variable-rate offer, ask which benchmark applies and how a change would affect your payment or cost. For a credit line, ask about fees, required payments and review or renewal conditions, not just the approved limit.
4. Confirm conditions before accepting
Check whether the document is an estimate, conditional offer or final agreement. Ask what verification remains and which conditions must be met before funds are released. Approval and funding are separate steps.
Keep a copy of the written terms and ask your advisor to explain anything you cannot reconcile. Next Fund can help you explore financing options with lending partners. The lender determines availability and final terms; no rate, approval or funding deadline is guaranteed.