5 Reasons Why Successful Businesses Also Borrow Money

A supplier offers you forty thousand dollars of inventory at sixty cents on the dollar, but only if you can wire the deposit by Friday. A commercial tenant space opens up two blocks from your restaurant's biggest competitor, and the landlord wants a signed lease within the week. A trucking client needs three more units on the road for a contract starting next month. These moments do not wait for anyone, least of all a bank.

Most business owners understand financing math in the abstract. They know interest rates, they know what a personal guarantee means, they know roughly what their credit score should look like. What fewer owners have priced out is the cost of time itself, the weeks that disappear between applying for a loan and actually having usable cash. That gap is not neutral. It is where opportunities go to die.

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Banks Are Approving More Loans, Just Not Quickly

There is a common assumption among small business owners that traditional lenders have tightened up and that is why approvals feel so hard to come by. The data tells a more complicated story. According to ISED Canada, the approval rate for small business debt financing actually climbed to 97 percent in 2025, up sharply from 89 percent the year before, and the share of requested funds that lenders actually authorized also reached 97 percent, the highest ratio recorded since 2015.

Read that again. Banks are saying yes more often than they have in a decade, and they are authorizing close to the full amount requested. So why does it still feel like pulling teeth to get money into your account?

Because approval and funding are two different events, separated by underwriting queues, document requests, credit committee schedules and internal risk reviews that were never built with urgency in mind. A "yes" that arrives four to six weeks after you applied is not the same as a "yes" you can act on. For a seasonal retailer or a contractor bidding on spring work, a technically approved loan that lands after the window has closed is functionally a rejection.

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What Slow Money Actually Costs

Owners tend to think about the cost of financing in terms of interest rate alone. That is only half the equation. The other half is opportunity cost, and it rarely shows up on a spreadsheet until it is too late to fix.

Consider inventory. A retailer who cannot move fast on a bulk buy loses the margin on that deal permanently, and often loses shelf space to a competitor who could move. According to BDC, businesses that misjudge their seasonal cash position frequently end up carrying either too much stock, which ties up capital and risks obsolescence, or too little, which means missing the sales window entirely. BDC points out that a seasonal operator such as a restaurant can see monthly sales swing from fifty or sixty thousand dollars in the off-season to two or three hundred thousand at peak, a gap wide enough that a few weeks of delayed working capital can decide whether that peak season is profitable or merely busy.

Contractors face a version of this that is even less forgiving, since weather windows and material costs move on their own calendar regardless of when a bank finishes its paperwork. A framing crew that cannot lock in lumber pricing before a spring increase, or a contractor who cannot mobilize equipment in time for a short building season, is not losing a little margin. They are sometimes losing the entire project to a competitor who financed faster.

Trucking operators know this rhythm too. Fleet expansion, trailer repairs and fuel costs do not pause while an application sits in a queue, and a truck parked waiting on financing is a truck earning nothing.

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The Real Price Tag Is Compounding, Not Fixed

The mistake most owners make is treating a slow approval as a one-time inconvenience rather than a recurring tax on the business. Every deal missed because funding arrived too late becomes a data point that shapes future decisions, usually toward caution. Owners stop chasing good opportunities because they have learned, through repeated frustration, that their capital cannot move fast enough to capture them. That is a much bigger loss than any single missed inventory deal. It is a business permanently operating below its own potential because its financing infrastructure cannot keep pace with its ambition.

Add to this a macro backdrop where interest rates and lending appetite continue to shift year over year, and the businesses that win are not necessarily the ones with the best credit profile on paper. They are the ones whose capital access matches the speed of their market.

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Where 2M7 Fits Into That Equation

This is precisely the gap 2M7 was built to close. We work with restaurants, retail operators, construction and contracting businesses, and trucking companies all across Canada. 2M7 offers Merchant Cash Advances built around one principle: fast business funding is not a luxury feature, it is the entire value proposition. We work with owners who have been turned away elsewhere because of bad credit, structuring financing around actual business performance and cash flow rather than a credit score alone. 

We are not a bank, and we do not operate on bank timelines. Where a traditional lender might take weeks to move an approved file into funded cash, our process is built to get capital into your account in days, because a deal, a deposit deadline or a seasonal window rarely gives you weeks to work with.

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The Decision Is Simple

If your business has ever missed an opportunity because financing took too long, that is not a one-time bad break. It is a pattern that will repeat until you change which lender you call first. Contact 2M7 directly, walk us through what you need funded, and find out what your options look like when they’re on time.

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Businesses need a robust cash flow to sustain their operations and generate profits. At times they may need to borrow funds to acquire resources, maintain operations, or grow.

Unfortunately, various factors can adversely affect a business's ability to borrow from traditional financial institutions. These factors include having a poor credit history or insufficient credit history, missed or late payments, high debt-to-service ratio, bankruptcy, records of default, or simply being a relatively new business.

However, there are many funding solutions available for Small Businesses that don’t fit the bank or credit Union model. These options are:

1. Merchant Cash Advance

A merchant cash advance is a financing option that offers businesses a lump sum cash payment in exchange for a percentage of their future credit card or debit card sales. This type of financing is best suited for businesses that require quick cash and have a high volume of credit or debit card sales.

The primary advantage of a merchant cash advance is the speed and ease of accessing immediate cash funding. The process typically takes only a few days, and the funds become available within a short period. Business owners should take into account that while merchant cash advance is a convenient cash flow instrument and allows you to get funding within a few days, it may come with higher fees and interest rates due to their quick access to cash.

2. Invoice Factoring or Cheque Factoring

Invoice factoring, also known as cheque factoring, is a financing option that enables businesses to utilize their outstanding invoices in exchange for a cash advance that is immediately available. The lender collects payment from the business's customers and pays the business the remaining balance minus the financing cost. This type of financing is ideal for businesses with bad credit history since their ability to borrow is based on the creditworthiness of their invoice customers rather than the borrower.

Businesses with long-term contracts, high-value invoices, or those needing cash to immediately purchase materials to fulfill high-value invoices should consider this type of bridge financing. Manufacturing, construction, transportation, and wholesale/distribution are businesses that can benefit from this type of financing to meet their immediate cash flow needs. The main advantage of invoice factoring is that the lender typically assumes responsibility for collecting payment from the invoice customers or payers. This can free up valuable time and resources for the business to focus on other aspects of their operations.

Furthermore, businesses with long payment cycles, delayed payments, or long-term contracts that involve milestone payments can obtain the necessary cash to expand or continue operating their businesses immediately. Similarly to merchant cash advance companies, factoring lenders may charge a high fee for assuming the risk of collecting on the invoice and the time gap until the invoice is due for payment.

3. B-Lender Loans

B-Lender loans are non-traditional financing options provided by private equity firms or online lenders. These lenders are often willing to lend to businesses with bad credit or little credit history for various purposes. They understand the complexity and cash flow requirements of small businesses and work with them regularly. This type of loan comes in various sizes and forms, depending on the business needs and the business entity's qualifications and lending risks.

B-Lender loans are a great financing option for start-ups, small businesses, seasonal revenue businesses, or those in urgent need of short-term financing. Traditional lenders typically require creditworthiness, good credit history, and collateral, but B-Lenders often have significantly more flexibility. These lenders are specialized in dealing with the complexity of newer and smaller businesses and can provide loans with less stringent due diligence processes and quicker turnaround times to meet business needs.

However, it is highly advisable for borrowers to understand the terms of the loan and carefully review the terms and conditions before accepting them. B-Lender loans are less standardized and customizable and can vary significantly in terms such as repayment, interest, default events, settlement, and legal jurisdiction. Businesses should also be aware that B-Lender loans may come with higher fees and interest rates due to their higher risk tolerance.

B-Lender loans can be a great option for businesses that are just starting or facing challenges with traditional lenders. These loans can provide flexibility, speed, and customized financing solutions to meet their specific needs. However, careful consideration of the terms and conditions and full understanding of the associated costs are crucial before committing to this type of financing.

4. Instant Payday Loans

Instant payday loans are short-term loans that can be used to cover unexpected expenses or emergencies. They are easy to obtain and are often offered by online lenders. Borrowers may receive access to immediate relief cash within hours, thanks to the quick and standardized approval process of the lenders that provide these loans. Instant payday loans are suitable for individuals with emergency cash needs or who need access to immediate cash to cover unexpected expenses.

Some typical uses for instant payday loans include medical bills, car repair bills, and home repair bills. These loans can offer immediate cash relief to ensure a person has the cash to cover daily living needs to continue working and earning money. Payday loans can be useful for individuals who have low credit scores or limited credit history and may not qualify for traditional loans. Borrowers should know that instant payday loans typically have high interest rates and fees for their ease of access and quick approval process. The repayment period is often within two to four weeks. As these loans can be accessed quickly and easily with minimal documentation requirements, these could be beneficial for individuals who need immediate cash and don't mind the associated fees.

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The Right Option For Your Busineness

There are various types of non-traditional lending and financial services available to businesses and consumers in Canada. These services can provide cash relief for a variety of situations, depending on the borrower's needs and qualifications. Merchant cash loans are suitable for businesses with high credit or debit card transaction volume and immediate cash needs. Invoice or cheque factoring can benefit businesses with valuable invoices with longer repayment terms. B-Lender loans are a great option for start-ups or small businesses with an immediate cash need to expand or maintain operations. Instant payday loans can provide relief for individuals with unexpected or emergency cash needs.

Overall, non-traditional lending and financial services can provide valuable solutions for businesses and consumers with unique financial needs. It is also vital to approach them with caution and careful consideration of the associated costs and repayment terms. With the right lender and loan terms, these financial services can help businesses and individuals overcome cash flow challenges and achieve their financial goals.

Best overall for eligible businesses seeking sales-based working capital: 2M7 merchant cash advances. Best for recurring borrowing: a business line of credit; best for unpaid invoices: invoice factoring. This 2026 guide compares six alternative business financing options in Canada by funding purpose, eligibility and repayment fit.

TL;DR

• 2M7 merchant cash advances suit eligible Canadian businesses seeking alternative business financing for working capital.
• Business lines of credit suit recurring borrowing; invoice factoring suits businesses waiting on customer invoices.
• Equipment financing matches funding to assets; purchase order financing supports eligible supplier payments.
• Equity financing suits growth plans where owners accept shared ownership instead of scheduled repayments.

Why this matters

The best financing option matches the expense, the cash coming back and the repayment obligation. An equipment purchase, an unpaid invoice and a payroll gap are different problems. Treating them as the same borrowing need makes comparison harder.

For your 2026 funding decision, start with the transaction rather than the provider. Identify what you need to pay, when that spending produces cash and which repayment structure your business can support. Then compare written offers within the right category.

What makes the best alternative business financing?

Use these criteria to shortlist funding before you submit applications:

• Funding purpose: Match unrestricted working capital, invoice funding or asset financing to the actual expense.
• Eligibility fit: Check operating history, revenue, customer quality and security requirements before applying.
• Repayment fit: Compare payment frequency and obligations with the timing of your receipts.
• Total obligation: Read the complete repayment amount, charges, guarantees and contractual conditions together.
• Ownership impact: Separate financing that creates payment obligations from investment that shares ownership.
• Exit terms: Understand early settlement, cancellation, renewal and security-release provisions before signing.

These criteria matter more than a headline approval claim. A funding offer belongs on your shortlist only when you understand both how it helps and what your business commits to.

Alternative business financing at a glance

This 2026 ranking gives each option a distinct job. The order is a decision guide, not a claim that one funding structure beats every other structure.

2M7 merchant cash advance

• Best for: Eligible businesses seeking sales-based working capital
• Standout feature: Direct funding with one fixed cost of capital disclosed before signing
• Key limitation: Minimum operating history and revenue requirements apply

Business line of credit

• Best for: Recurring short-term borrowing
• Standout feature: Draw, repay and reuse credit within the agreement
• Key limitation: Access depends on approval and account terms

Invoice factoring

• Best for: Businesses waiting on customer invoices
• Standout feature: Funding tied to eligible receivables
• Key limitation: Customer-facing collection arrangements need review

Equipment financing

• Best for: Purchasing business equipment
• Standout feature: Financing connected to a specific asset
• Key limitation: Not a general solution for unrelated operating expenses

Purchase order financing

• Best for: Supplier payments for confirmed customer orders
• Standout feature: Funding connected to order fulfilment
• Key limitation: Order, supplier and transaction eligibility restrict its use

Equity financing

• Best for: Growth without scheduled financing repayments
• Standout feature: Capital exchanged for an ownership interest
• Key limitation: Owners give up a share of ownership and potentially control

1. 2M7 merchant cash advances: best for sales-based working capital

A merchant cash advance provides business funding against future sales. 2M7 is a Canadian direct funder, not a broker, providing merchant cash advances and working capital for expenses such as payroll, inventory, equipment and cash flow gaps.

2M7 merchant cash advances are best for eligible Canadian businesses seeking sales-based working capital rather than a conventional loan. Businesses must have operated for at least 3 months and generate $15,000 or more in monthly revenue. Businesses with less-than-perfect credit are among those served.

2M7 merchant cash advance pros:

• You deal with a direct funder rather than a broker.
• Funding supports several operating purposes, including payroll and inventory.
• One fixed cost of capital is shown before signing and does not change with repayment duration.

2M7 merchant cash advance cons:

• Businesses below the operating-history or revenue thresholds do not meet the stated criteria.
• Flexible payments are only for businesses that process daily card payments.
• A fixed cost does not remove the need to check whether payments fit your cash flow.

Best for: An operating business with established revenue and a defined working-capital need.

Verdict: Hold until the written payment structure fits your cash flow. Meeting eligibility requirements is the starting point, not the final decision.

2. Business lines of credit: best for recurring borrowing

A business line of credit lets you draw funds up to an approved limit and reuse repaid amounts under the agreement. Banks, credit unions and non-bank providers offer credit facilities, so compare the actual contract rather than treating the provider category as the deciding factor.

A business line of credit fits repeated gaps between outgoing payments and incoming receipts. It is less useful when an ongoing operating loss, rather than timing, drives the need for funds.

Business line of credit pros:

• You can draw funds as needs arise within the approved limit.
• Repaid amounts become available again under revolving terms.
• One facility can support different short-term operating expenses.

Business line of credit cons:

• Approval, security and guarantee requirements vary by provider.
• Review provisions and account conditions affect continued access.
• Repeated borrowing can conceal a persistent cash shortfall.

Best for: Businesses with recurring, identifiable cash timing gaps and a clear repayment source.

Verdict: Hold until you have reviewed draw conditions and renewal terms. Choose a business line of credit for repeat use, not simply because the available limit looks attractive.

3. Invoice factoring: best for unpaid customer invoices

Invoice factoring converts eligible receivables into funding by selling invoices to a factor. The arrangement centres on customer invoices, so customer credit quality and invoice eligibility matter alongside your own business profile.

Invoice factoring is a focused option for businesses that have completed work but are waiting for payment. It does not solve a lack of sales, disputed billing or an expense unsupported by eligible receivables.

Invoice factoring pros:

• Funding connects to work already invoiced.
• Customer payment quality forms part of the assessment.
• Collections support can form part of the arrangement.

Invoice factoring cons:

• Disputed or otherwise ineligible invoices limit what you can fund.
• Customer notification and collection practices need careful review.
• Recourse terms determine your responsibility if a customer does not pay.

Best for: Business-to-business suppliers and service providers with eligible, unpaid invoices.

Verdict: Hold until you understand recourse and customer contact. Ask who collects payment, what customers receive and what happens when an invoice remains unpaid.

4. Equipment financing: best for a specific asset purchase

Equipment financing connects funding to machinery, vehicles or other business equipment. Depending on the agreement, the structure involves financing a purchase or leasing the asset, with different ownership and end-of-term obligations.

Choose equipment financing when the asset itself is the reason you need funding. Keep operating cash needs separate so you can assess whether the asset's business value supports the commitment.

Equipment financing pros:

• The funding purpose is tied to an identifiable asset.
• You can compare the agreement against the equipment's expected business use.
• Purchase and lease structures offer different ownership arrangements.

Equipment financing cons:

• Asset-linked funding does not necessarily cover payroll or other operating expenses.
• Maintenance, insurance and end-of-term obligations require review.
• Equipment can lose usefulness while contractual payments continue.

Best for: Businesses acquiring equipment with a clear operating purpose.

Verdict: Hold until ownership and end-of-term terms are clear. Compare equipment financing agreements using the full commitment, not just the payment shown on a proposal.

5. Purchase order financing: best for supplier payments

Purchase order financing supports eligible supplier payments associated with confirmed customer orders. The funder assesses the transaction, including the order, customer, supplier and fulfilment arrangements.

Purchase order financing fits an order-specific gap: you have a customer commitment but need funding to obtain the goods. It is not interchangeable with general working capital for unrelated expenses.

Purchase order financing pros:

• Funding connects to an identifiable customer order.
• Supplier payments are central to the structure.
• You can assess the funding commitment against a specific transaction.

Purchase order financing cons:

• Not every order, supplier or transaction qualifies.
• Delivery, acceptance and customer payment conditions complicate the arrangement.
• Financing obligations must fit the order's remaining margin.

Best for: Businesses fulfilling eligible confirmed orders that require supplier payments before customer receipts.

Verdict: Hold until the complete order economics work. Account for supplier, shipping, fulfilment and financing obligations before accepting funding.

6. Equity financing: best for growth with shared ownership

Equity financing brings capital into a business in exchange for an ownership interest. Unlike funding with scheduled repayments, the central trade-off is ownership, investor rights and the expectations attached to the investment.

Equity financing suits growth plans where an owner accepts an investment partner. A temporary cash timing problem alone is not a strong reason to give up ownership.

Equity financing pros:

• Equity capital does not carry the same scheduled repayment structure as borrowing.
• An investment agreement can support a longer-term growth plan.
• Investors can contribute expertise or connections alongside capital.

Equity financing cons:

• Existing owners give up part of their ownership.
• Investor rights can affect decisions, reporting and future fundraising.
• Negotiating ownership and governance takes preparation.

Best for: Businesses pursuing growth where shared ownership fits the owner's objectives.

Verdict: Hold until ownership and governance terms are understood. Assess the investor relationship as carefully as the capital offered.

How we ranked these financing options

The 2026 ranking follows funding purpose, eligibility fit, repayment fit, total obligation, ownership impact and exit terms. Each option earns a different use-case slot; the comparison does not claim that all businesses qualify or that all providers offer identical terms.

Merchant cash advances lead for eligible sales-based working capital. Business lines of credit address recurring borrowing, invoice factoring addresses receivables, equipment financing addresses assets, purchase order financing addresses orders, and equity financing addresses ownership-based investment.

Which financing option should you choose?

For an undecided owner, choose the category before the provider. Follow this sequence for your 2026 shortlist:

1. Funding purpose: Name the expense and explain how it supports your business.
2. Cash timing: Map customer receipts against the proposed payment obligations.
3. Contract terms: Compare the full commitment, guarantees, security and exit provisions.

Choose the funding category before comparing provider offers.

If you need general working capital and meet the stated operating and revenue thresholds, start by discussing a merchant cash advance. If the need comes from an invoice, an asset or a customer order, start with the category designed around that transaction.

Before signing, prepare a cash flow forecast showing the proposed obligation alongside payroll, supplier payments and existing commitments. Approval answers whether a funder will proceed. Your forecast answers whether the arrangement works for your business.

FAQ

What's the best alternative business financing option in Canada?

The best alternative business financing option depends on the funding purpose and repayment fit. Merchant cash advances address eligible working-capital needs, while invoice factoring, equipment financing and purchase order financing address specific transactions.

Is a merchant cash advance a business loan?

A merchant cash advance is funding against future sales, not a conventional business loan. Review the agreement's payment structure, total obligation and conditions before signing.

What does a business need to qualify for 2M7 funding?

The stated minimums are at least 3 months in business and $15,000 or more in monthly revenue. Meeting those thresholds does not establish approval or determine the final funding terms.

Is invoice factoring better than a business line of credit?

Invoice factoring fits eligible unpaid invoices, while a business line of credit fits recurring borrowing needs. Compare invoice eligibility, collection arrangements and recourse against the credit facility's draw and repayment conditions.

Can a business with less-than-perfect credit seek funding?

Businesses with less-than-perfect credit can seek funding from providers whose criteria include them. Approval still depends on the provider's assessment and the business meeting applicable requirements.

Do merchant cash advances always have flexible payments?

Do not assume every merchant cash advance has flexible payments. Confirm the written terms; the flexible-payment feature described in this guide is only for businesses that process daily card payments.

What should I compare besides the payment amount?

Compare the total obligation, payment frequency, guarantees, security and exit terms. For equity financing, also compare ownership dilution, investor rights and governance requirements.

One last thing

Approval is not a cash flow plan. Before accepting alternative business financing in 2026, place the proposed obligations into a quieter-sales scenario using your own records. If the plan depends on every customer paying promptly, revisit the amount or structure before signing.

Related guides

• Best equipment financing options in Canada
• Best working capital loan options for small businesses
• Best small business loans in Canada