Which Industries Benefit the Most from Merchant Cash Advance?

As a small business owner, when you go to a bank for a business loan, instead of looking at the performance of your business, the bank will check your personal credit score first. This means, even if your business is performing well and profitably, a fair credit score of 600-650 could prevent you from getting a small business loan. A credit score of under 600 portrays you as a high-risk borrower and will make it nearly impossible to borrow even a small loan. A low credit score stops business loans being disbursed to profitable and stable businesses. Bad credit history will follow you and your business for years. For example, you may have owned a successful business for a few years and now you are looking for funds to expand into another city or purchase more equipment, but when you visit the bank, the loan officer turns you away. Why? The answer is easy – his decision is based on your poor personal credit history.

Credit scores

There is no standard scale that defines your credit score. That evaluation varies from a credit agency to a credit agency as they set their own criteria. A credit report from Equifax may give a person one number, while a credit report from another institution will very likely suggest a higher or lower credit score for the same person. Credit scores in Canada are officially assessed by two entities: Equifax and TransUnion.

• The higher the credit score, the safer it is to lend to you
• Credit scores typically range from 300 to 900

Credit score brackets:

1. 800-900 – Highest bracket; excellent credit history
2. 700-799 – Very good credit history; lowest interest rates available
3. 650-699 – the Lowest score that can receive standard loans
4. 600-649 – Fair score; higher interest rates applicable
5. 300-599 – Low scores; less likely to receive business loans

Therefore, if you have a credit score of 649 or lower, it will dramatically reduce the chance of your business loan being approved. Since major banks first look to the business owner’s personal credit score, even exceptional business performance may not make you eligible for loans, or high-interest rates may apply to you.

What happens if you have a low credit score?

If the borrower has a bad credit score, other than a higher likelihood of being refused a loan by the major financial institutions, there are a few other ramifications:

• Higher interest rates on loans and lines of credit
• Difficulty finding business premises
• Security deposits required by utility companies
• Higher insurance premiums for business assets

Private lenders help small businesses with bad credit history get loans

Fortunately, there are ways of getting business loans for your company even if you - the borrower - have bad credit. To get small business loans with bad credit history, private lenders are one of the best options. These are more local lenders, better tuned to market conditions, who offer more flexible loan options. There are many private lenders that can provide small business loans. Bad credit history or credit score will make little or no difference to the loan, depending on the type of loan you opt for. Moreover, the application process is much easier and repayments are more flexible. It is possible that a private lender will ask you to open a business bank account with them before they provide you with funding.

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How to get a business loan with a bad credit score?

Merchant cash advance (MCA) lenders provide cash advances, customize private terms and business equity line of credit to small business owners. This would be the best way to get a business loan with no credit assessment, and beneficial repayment terms if you happen to have a bad credit history. Instead of checking your personal credit score, a merchant cash advance provider assesses your business’ performance and monthly credit card sales.The MCA lender will give you an upfront sum of cash in exchange for a percentage of the business’s daily credit card income.  The MCA lender will tie into the credit card processor directly to settle credit card payments so the business owner does not have to worry about missing the payments or dealing with administrative processes. There are many pros and cons of having MCA but regardless of that, it is still considered as the best way to get business fundings.A private term loan gives you the same perks as a small business loan from a major lending institution. However, the private lender does not give the same weight to your bad credit when deciding on the small business loan. Instead, the lender mitigates the risk with fixed daily repayment terms.A business equity line of credit is much less reliant on the credit history of the business owner. Therefore, if you have a bad credit history and require financing for your business, you can use your equity in the business as collateral. A business equity line of credit helps businesses resolve their cash flow issues, though it does require putting up a part of your ownership as collateral.

If the funding is for equipment specifically, our guide to bad credit equipment financing in Canada compares leasing, vendor financing, government-backed programs and merchant cash advances, including how their costs differ.

Start-up bad credit business loans

For entrepreneurs with bad credit seeking business loans for their start-up, private lenders and alternative lending are the best options. Where small business loan applications at major institutions have a less than 25% chance of approval, merchant cash advance (MCA) approvals stand at over 75%! This is because MCAs do not evaluate the business owner’s personal credit score, and only take into account business performance. Besides that, MCAs can be approved within 4-6 hours.Government loans and grants are also great options. Both have flexible repayment terms and offer additional business support to small entities. However, some of the government loans may require a good credit history and may have strict eligibility criteria.

Using business loans to rebuild your credit

Apart from using funds to expand their business, business loans can help borrowers improve their personal credit scores. Once you opt for an equity line of credit or a private term loan, make sure to pay on time and your credit score will improve over time. As a result, the better your credit score is, the lower your interest rates will be and you will have a greater chance to access financial lending markets.Borrowing is an inherent part of any business regardless of its size and the industry it operates in. Major financial institutions and private lenders usually lend to businesses with exceptional credit histories opposed to those with a bad one. Don’t let your bad credit history stop your business from getting the financing it needs. Options such as a merchant cash advance (MCA) will provide you with the required funding, as well as improve your credit card history in general. If you think it might be a good solution for you, do not hesitate to get in touch with us.

Ontario, Alberta, Saskatchewan and Manitoba all require an owner to pay a contractor's proper invoice within 28 days, or to dispute it in writing within 14 days. Once paid, a contractor has 7 days to pay its subcontractors. The provinces differ on holdback, lien deadlines and which projects are covered: Manitoba's holdback is 7.5% while the others hold back 10%, and Saskatchewan's lien period is still 40 days while the others allow 60.

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These rules are known as prompt payment legislation. They set a clock on construction payments that starts when a contractor delivers a proper invoice, and they give unpaid parties a fast dispute process called adjudication. Each province built its own version, so a contractor working across provincial lines faces different deadlines on each job.

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This guide compares the rules in each province, explains what they mean for a contractor's cash flow, and sets out what to do when a payment is late. It is general information, not legal advice. Check your contract and the current statute, or speak with a construction lawyer, before acting on a specific dispute.

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Prompt payment rules by province at a glance

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Ontario, Saskatchewan and Manitoba apply prompt payment to contracts entered into on or after the in-force date. Alberta also required contracts already in place to comply by August 29, 2024. Alberta's column covers private projects. Contracts with the Government of Alberta follow separate rules, explained below.

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Prompt payment in other jurisdictions

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What these rules mean for a contractor's cash flow

Prompt payment shortens the wait for most of a contractor's money, but it does not remove the wait. Three gaps remain even when every party follows the rules.

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The billing cycle. Proper invoices are usually issued monthly, and Alberta requires one at least every 31 days. Work done early in a billing period is not invoiced until the period ends, and the owner then has 28 days to pay. Materials bought on day one can go unpaid for close to two months.

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The holdback. On a $200,000 contract in Ontario, Alberta or Saskatchewan, the owner retains $20,000. In Manitoba the holdback on the same contract is $15,000. On most projects that money is released only after the lien period expires near completion. Ontario now requires annual release on all contracts, and Alberta requires annual or phased release on contracts over $10 million that run longer than a year.

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Payment down the chain. A subcontractor's 7-day clock starts when the contractor is paid. If the owner pays on day 28, the subcontractor may wait 35 days from the contractor's invoice. In Ontario, Saskatchewan and Manitoba, if the owner does not pay at all, the contractor must still pay its subcontractors by day 35 after it invoiced the owner, unless it gives them a notice of non-payment.

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Meanwhile payroll, equipment rentals and supplier accounts run on their own schedules, often weekly or within 30 days. A busy contractor can be profitable on every job and still be short of cash between invoices. Planning for that gap is part of bidding a job, not an afterthought.

Province-by-province details

Ontario

Ontario's Construction Act introduced prompt payment on October 1, 2019, for public, private and alternative financing and procurement contracts. Amendments in force since January 1, 2026, make an invoice proper unless the owner gives written notice of a deficiency within 7 days.

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The 2026 amendments also require holdback to be released every year. Within 14 days after each contract anniversary, the owner must publish a notice of annual holdback release, then pay the accrued holdback between 60 and 74 days after publication, provided no lien remains undischarged. For contracts entered into before January 1, 2026, annual release begins on the second anniversary after that date. Disputes go to adjudication through the Ontario Dispute Adjudication for Construction Contracts (ODACC), and parties can now also retain private adjudicators qualified by ODACC.

Alberta

Alberta's Prompt Payment and Construction Lien Act has applied to private projects since August 29, 2022. Alberta allows 90 days to register a lien for the supply of ready-mix concrete and for oil or gas well work, longer than the general 60. Late payments carry interest at the contract rate, or the rate in the Judgment Interest Regulation if the contract sets none.

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Contracts with the Government of Alberta entered into on or after April 1, 2025, follow a separate prompt payment process under the Public Works Act. The Crown must pay an undisputed proper invoice within 28 days. Contractors must pay subcontractors within 35 days of receiving the subcontractor's proper invoice, and subcontractors pay their own subcontractors within 42 days. Payment disputes can go to adjudication up to the Court of Justice's monetary limit, currently $200,000. Capital asset upkeep contracts and special scope contracts, where the contractor provides financing, are excluded.

Saskatchewan

Saskatchewan added prompt payment to The Builders' Lien Act on March 1, 2022, for contracts entered into on or after that date. The Act binds the Crown, with exclusions such as highway work, and mining and certain power contracts are exempt. Saskatchewan's lien period is 40 clear days after the triggering event, such as completion or abandonment, which makes it the shortest of the four provinces. Adjudication runs through the Saskatchewan Construction Dispute Resolution Office (SCDRO).

Manitoba

Manitoba's prompt payment rules took effect April 1, 2025, and apply only to contracts entered into on or after that date. The same amendments raised the lien period from 40 to 60 days. Manitoba's holdback is 7.5%, retained for at least 60 days after substantial performance or completion. The Act binds the Crown but excludes Manitoba Hydro contracts for generating stations and related plant, and work under contracts governed by The Infrastructure Contracts Disbursement Act, which include certain provincial highway contracts. Architects' and engineers' fees are also exempt from prompt payment.

What to do when a payment is late

The prompt payment process gives a contractor several remedies short of court. Work through them in parallel, because the lien deadline keeps running while you pursue the others.

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1. Confirm your invoice was proper. The 28-day clock only starts on a proper invoice, which must include the details the statute lists, such as the invoice date, the work period, the amount and payment terms. In Ontario, an owner who finds a deficiency must now say so within 7 days.
2. Check for a notice of non-payment. If the owner disputes the invoice, it must give written notice within 14 days stating the amount withheld and why. Any undisputed amount is still due within 28 days.
3. Track interest. Unpaid amounts accrue interest in all four provinces. Saskatchewan and Manitoba use the prejudgment rate, or the contract rate if higher. Alberta uses the contract rate, or the Judgment Interest Regulation rate if the contract sets none.
4. Start adjudication. For a disputed amount, a contractor can refer the dispute to the province's adjudication body. Adjudication is designed to resolve payment disputes faster than court, and the decision must be followed unless a court or arbitrator later decides otherwise.
5. Protect your lien rights. Register a lien within the provincial period (60 days in Ontario, Alberta and Manitoba; 40 clear days in Saskatchewan) or lose the right. Ontario extends the lien period in some cases where adjudication has started, but get legal advice before relying on an extension.

Covering costs while you wait to be paid

Prompt payment sets a deadline, but contractors still carry materials, payroll and holdback for weeks on every project. Before bidding, map when each invoice will be paid and when each major cost falls due. Negotiate deposits or mobilization payments where you can, and invoice on the first day the contract allows.

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When the gap is still too wide, working capital can bridge it. A merchant cash advance from 2M7 Financial Solutions provides funding based on a business's revenue, with no collateral required, and repayment can be set as a percentage of sales. 

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See how contractors use it on the construction funding page or see what options fit your project schedule.

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Frequently asked questions

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How long does an owner have to pay a contractor in Ontario?

An Ontario owner must pay a contractor's proper invoice within 28 days of receiving it, unless it gives a notice of non-payment within 14 days. Undisputed amounts are still due within 28 days.

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Does Alberta have prompt payment legislation?

Yes. Alberta's Prompt Payment and Construction Lien Act has applied to private projects since August 29, 2022, and owners have 28 calendar days to pay a proper invoice. Contracts with the Government of Alberta entered into on or after April 1, 2025, follow a separate prompt payment process under the Public Works Act.

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Does British Columbia have prompt payment legislation?

BC's Construction Prompt Payment Act received royal assent on November 27, 2025, but is not yet in force. Once in force, owners will have 28 days to pay a proper invoice.

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What is the holdback percentage in each province?

The holdback is 10% in Ontario, Alberta and Saskatchewan, and 7.5% in Manitoba.

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How long do I have to register a construction lien?

The lien period is 60 days in Ontario, Alberta and Manitoba, and 40 clear days in Saskatchewan. Alberta allows 90 days for the supply of ready-mix concrete and for oil or gas well work.

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How fast must a contractor pay its subcontractors?

In Ontario, Alberta, Saskatchewan and Manitoba, a contractor must pay its subcontractors within 7 days of receiving payment from the owner, unless it gives a notice of non-payment. In Ontario, Saskatchewan and Manitoba, a contractor that has not been paid must still pay its subcontractors by day 35 after invoicing the owner, unless it gives a notice of non-payment.

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What is construction adjudication?

Adjudication is a fast dispute process for construction payment disputes, run by a provincial body such as ODACC in Ontario. The adjudicator's decision is binding on an interim basis, which means it must be followed unless a court or arbitrator later decides otherwise.

Sources

Checked October 13, 2026.

• Ontario Construction Act, R.S.O. 1990, c. C.30
• Ontario Ministry of Transportation: Prompt Payment Administration Manual
• Ontario Bar Association: Key 2026 amendments (January 15, 2026)
• Osler: Ontario Construction Act amendments now in effect (March 2, 2026)
• Canadian Bar Association: Changes to the Ontario Construction Act
• Ontario Dispute Adjudication for Construction Contracts (ODACC)
• Government of Alberta: Prompt payment rules for the construction industry
• Government of Alberta: Extending prompt payment to the Public Works Act (May 15, 2025)
• Alberta Land Titles: Construction lien checklist
• Bennett Jones: Prompt payment legislation in Alberta
• McMillan: Alberta's Prompt Payment and Construction Lien Act (August 30, 2022)
• Saskatchewan: The Builders' Lien Act (consolidated)
• Saskatchewan: The Builders' Lien (Prompt Payment) Amendment Act, 2019
• Manitoba: The Builders' Liens Act, C.C.S.M. c. B91
• Manitoba Prompt Payment Adjudication Authority
• Federal Prompt Payment for Construction Work Act, S.C. 2019, c. 29, s. 387
• Order Designating Provinces Under Subsection 6(1) of the Federal Prompt Payment for Construction Work Act
• Government of British Columbia: Prompt payment legislation (updated August 20, 2026)
• McCarthy Tétrault: Québec adopts prompt payment regulation (September 8, 2025)
• Osler: Canadian prompt payment and construction law reforms (updated March 30, 2026)

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The business landscape is always evolving. In the last few weeks, the situation for many businesses in Ontario has changed drastically. You may be wondering where you can turn to find support in these challenging times.The good news is that there are plenty of supports for business owners operating in Ontario. If you’re looking for answers, try some of these tips and resources.

Federal and Provincial Support for Business Owners

Both the federal and provincial governments have announced funds designed to help business owners keep their doors open and their lights on during this time. If you’ve faced slashed hours or needed to lay employees off, then you may be eligible for business support funds.These funds could help you pay your employees during this time. Other funds are available to help businesses n Ontario manage their day-to-day operating expenses.

Check Government Websites for Resources

You may also want to look at the provincial government’s website, which has lists of programs and services for business owners like you. You can find one-on-one small business consulting and guidance, as well as workshops and more. You may also qualify for consultations with lawyers or accountants. Support is also available if you need grants, permits, or licenses. There are even resources to support mentorship and networking, available through Small Business Enterprise Centres.

Connect with Your Peers

Networking resources may be available through government-run resources. You may also find support through local small business organizations or trade federations. Even social media can help as you connect with your colleagues and peers.

Great Options for Creating Liquidity

In an uncertain market, business owners like you need financial options to help you create liquidity. Check in with your financial institution about measures they can provide to help you. You may also explore other options, like a merchant cash advance. The right funding options will help you create stability and flexibility when your business needs it most. Curious to learn more about your financing options? Get in touch with the experts and discover what a merchant cash advance could do for your business.