3 Signs You Should Consider a Merchant Cash Advance

The fourth quarter makes or breaks a lot of small businesses in Canada. Retailers and restaurants that get their staffing and inventory right in October and November tend to walk into January with healthy cash reserves. Those that wait until the first week of December to figure out their game plan usually spend the season scrambling, and scrambling costs money.

If you own a retail shop, a restaurant, or any business that lives and dies by foot traffic during the holidays, now is the time to lock in your plan. Here's how to think about staffing, stock, and cash flow so the next ten weeks work in your favour instead of against you.

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Start With Your Sales History, Not Your Gut

Too many owners plan the holiday season based on how busy last December felt rather than what the numbers actually showed. Pull your point-of-sale reports from the last two or three holiday seasons and look for patterns. Which products sold out early? Which days of the week saw the heaviest traffic? What time of day did your restaurant get slammed?

Analyzing past sales data to spot seasonal patterns is one of the most effective ways to avoid overstocking or running out of popular items. This isn't complicated analysis. Even a basic spreadsheet showing week-over-week sales from last November and December will tell you more than a gut feeling ever will.

For retailers specifically, this is also the moment to think seriously about how much inventory you actually need on hand versus how much cash you're willing to tie up in stock that might not move. If you've been turning down orders because you can't front the cost of holiday inventory, you might want to consider your options before you're forced to choose between restocking and making payroll.

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Staffing: The Problem Nobody Talks About Early Enough

Here's a fact that should change how you're thinking about hiring right now. The National Retail Federation recently predicted that holiday seasonal hiring would hit its lowest level in over 15 years, making early recruitment more critical than ever. That forecast is for the American market, but Canadian retailers and restaurants are competing for the same shrinking pool of available seasonal workers, and the labour crunch tends to move north with a short delay.

Practically, this means posting your seasonal job openings now, not in mid-November. It means offering shift flexibility and being upfront about pay. It also means having a real contingency plan if you can't fill every shift you need.

For restaurants, the stakes are a bit different but no less serious. Using past data to anticipate peak times helps restaurants build optimized schedules without over- or under-staffing. A kitchen that's short-staffed on a Friday night in December doesn't just lose sales, it loses customers who won't come back after a bad experience. If your restaurant's equipment is also aging and slowing down your kitchen's throughput during peak hours, that's a separate problem worth solving before the rush hits.

What Canadian Shoppers Are Actually Doing Differently

It's not enough to staff up and stock up the way you did last year. Consumer behaviour is shifting, and ignoring that shift means missing opportunities your competitors will catch. According to Retail Council of Canada's holiday shopping research, Canadian consumers are shopping earlier and comparing prices more carefully than in past years.

That earlier-shopping trend matters because it means your marketing and inventory need to be ready well before Black Friday, not scrambling to catch up to it. If your customers are comparison shopping more aggressively, your pricing, promotions, and in-store or online experience need to justify why they should buy from you instead of clicking over to a competitor's site.

Refreshing your online listings and promoting gift cards are easy, high-impact ways to prepare for the holiday shopping rush. Simple, low-cost moves like updating your Google Business listing, refreshing your website's holiday hours, and pushing gift card sales through email and social media can generate real revenue with almost no upfront cost.

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Give Shoppers a Reason to Walk Through Your Door

If customers are comparing prices and shopping online, your store has to earn the trip. Start with the basics: a slow checkout is one of the fastest ways to lose a holiday sale, so add a second register during peak hours and make sure your POS is ready for the volume. Then give people a reason to come in. A coupon, a limited-time discount, or a buy-one-get-one deal can do it. Costco has held its hot dog and soda combo at $1.50 since the mid-1980s because it draws people in, and they usually leave having bought a lot more than lunch.

Finally, walk your shop the way a customer would. A clean storefront, fresh signage, and a seasonal display cost far less than the sales they protect.

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Where Fast Funding Fits Into the Picture

Every piece of holiday prep costs money before it generates a dollar back. Inventory has to be purchased before it's sold. Staff have to be hired and trained before they're productive. Equipment repairs have to happen before the kitchen can handle a full house on a Saturday night.

This is where a lot of small business owners hit a wall, particularly if a bank has already turned them down or they don't have the time to wait six weeks for a traditional loan decision. A Merchant Cash Advance is built for exactly this kind of short-term, high-stakes timing problem. Rather than waiting on a lengthy approval process, you're leveraging future sales to access capital now, when you actually need it, not after the holiday window has already closed.

If your credit history isn't perfect, that shouldn't be the reason you miss the busiest quarter of your year. Many alternative lenders look past your credit score and focus on your recent revenue instead of your past setbacks. Fast business funding and small business loans through alternative lenders exist precisely because traditional banks move too slowly and too conservatively for the realities of running a seasonal business. 

Contractors and trades businesses often assume holiday funding conversations don't apply to them, but late Q4 and early Q1 are when many trades see a surge in emergency repair calls and pre-holiday renovation rushes. Having working capital on hand means you can staff up and stock materials without cash flow becoming the bottleneck.

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Get Ahead of It Now

Waiting until December to figure out staffing, inventory, and cash flow puts you behind before the season even starts. The businesses that come out of Q4 stronger are the ones making these decisions in October and November, while there's still time to act on them.

If you need capital to hire, stock up, or fix equipment before the rush hits, reach out to 2M7. We move fast, we understand Canadian small business realities, and we can get you funded well before you would have finished filling out bank paperwork.

Restaurant equipment financing lets a restaurant pay for ovens, refrigeration, hoods, dishwashers and POS systems over time instead of in one payment. Canadian restaurants have six main routes: leasing, vendor financing, bank or specialist equipment financing, BDC, the Canada Small Business Financing Program, and a merchant cash advance.

The right one depends on four things: how long the restaurant has been operating, its credit history, how quickly the equipment is needed, and whether the equipment is new or used. A planned kitchen upgrade gives you time to compare offers. An emergency replacement does not.

Restaurant margins leave little room for the wrong choice. Statistics Canada reports that food services and drinking places earned a 4.1% operating profit margin in 2024. Cost of goods sold took 35.9% of expenses, and salaries, wages and benefits took another 33.6%. A walk-in cooler that fails in July has to be paid for out of what is left.

This guide explains how each option works, what each provider looks at, what each costs, and where each one fits.

Your restaurant equipment financing options compared

These routes overlap. A dealer may arrange its financing through a bank or a specialist, and BDC is itself an equipment financing provider. The table separates the routes you will meet when you shop.

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Need to replace equipment and keep your operating cash intact? See 2M7's restaurant equipment and operations funding, including who qualifies and how payments work.

How much does restaurant equipment financing cost?

There is no single rate for restaurant equipment financing in Canada. Your quote depends on the provider, your restaurant's finances, the equipment, the amount and the length of the agreement.

To compare offers fairly, ask every provider the same six questions about the same purchase:

1. How much cash do I pay up front, including any deposit or down payment?
2. What is each payment, and how often is it collected?
3. What is the total I will pay, including all financing charges and fees?
4. Is there a final payment or a buyout before I own the equipment?
5. What happens if I pay the balance early?
6. Do the payments change if my sales fall?

A longer term lowers each payment and raises the total you pay. A low lease payment can also leave out the buyout you need to take ownership.

The CSBFP is the one route with a published ceiling. The maximum floating rate is the lender's prime rate plus 3%, and the maximum fixed rate is the lender's single-family residential mortgage rate plus 3%. The registration fee is 2% of the loan. These are limits, and your own quote may be lower.

A merchant cash advance carries no interest rate, but it does carry a cost. Ask for the dollar amount you will receive and the dollar amount you will repay, in writing, before you decide.

Restaurant equipment leasing

Restaurant equipment leasing lets you use equipment for a fixed term in exchange for regular payments, without buying it at the start. Many leases include an option to purchase the equipment when the term ends.

BDC's guidance is that leasing suits equipment with a shorter lifespan or equipment that needs frequent updating, while buying suits equipment that will last. In a restaurant, that points to leasing for POS hardware and other technology, and to buying for ranges, hoods and walk-in coolers that stay in service for years.

Before you sign a lease, ask four questions. Who pays for maintenance? Can you swap the equipment during the term? What does the end-of-term buyout cost? What happens if the restaurant moves or closes?

Leasing also changes how the cost is treated at tax time. The Canada Revenue Agency lets a business deduct the lease payments incurred in the year for property used in the business. If the leased property has a total fair market value above $25,000, you and the lessor can jointly elect to treat the lease as a purchase. You would then deduct the interest portion and claim capital cost allowance on the equipment. Ask your accountant which treatment fits your restaurant.

What a lessor looks at: the equipment itself, the length of the term, and your restaurant's ability to make the payments.

Vendor and dealer financing

Vendor financing means the company selling the equipment also arranges the financing. BDC describes it as financing provided through a manufacturer's financing division or a partner financial institution.

The appeal is convenience. You choose the equipment and arrange payment in the same conversation, and BDC notes that vendor financing is fast and carries lower upfront costs.

The trade-off is flexibility. BDC describes vendor financing as shorter term and less flexible than a traditional term loan. Before you sign, compare the total you will pay against at least one other option on this page.

Ask for the equipment's cash price separately from the financing offer, so you can see what the financing itself costs. Choose the equipment first, on the model, warranty and servicing your kitchen needs. A supplier's financing offer should not decide what you buy.

What a vendor looks at: this varies by dealer and by the financing partner behind it. Ask who the actual financing provider is and what happens if you want to pay the balance early.

Bank and specialist equipment financing

Banks and specialist equipment financing companies fund the purchase of business equipment and assess both the business and the asset. According to BDC, the equipment is used as collateral most of the time, and the repayment period is matched to the equipment's lifespan.

This route suits an established restaurant buying equipment that will last. The paperwork is heavier than with a vendor. BDC lists what equipment financing providers commonly ask for:

• Financial statements for the past two years
• A monthly cash flow forecast for the rest of the current year and the following 12 months
• Background on the company, its operations and its management
• An explanation of how the equipment will increase sales, profitability or efficiency

Requirements vary with the provider and the size of the request. Ask whether the offer covers delivery and installation. Financing that covers only the equipment can leave a cash gap before the kitchen can use it.

What a bank or specialist looks at: the restaurant's financial history, its forecast, and the resale value of the equipment.

BDC equipment financing

The Business Development Bank of Canada offers an Equipment Loan for new or used equipment. Its terms are among the longest available to a Canadian restaurant:

• Financing of up to 125% of the purchase price, which leaves room for shipping and installation
• Repayment over up to 12 years
• The option to postpone capital payments for up to 24 months at the start

Eligibility is the constraint. BDC requires the business to be based in Canada, to have generated revenue for at least 12 months, and to have a good credit track record.

Postponing capital payments delays the principal. It does not remove the cost of financing, so check what the payment becomes once principal repayment starts.

What BDC looks at: revenue history of 12 months or more, and credit record. A restaurant that opened this year, or one with damaged credit, will need a different route.

Canada Small Business Financing Program

The Canada Small Business Financing Program (CSBFP) is a federal program that shares the risk of a loan with the financial institution that makes it. You apply through a bank or credit union, and that institution alone decides whether to approve the loan. Most start-ups and existing small businesses with gross revenues of $10 million or less can apply.

The program allows a business to borrow up to $1.15 million: a maximum of $1 million in term loans and $150,000 in lines of credit. Term loans can pay for new or used equipment.

The full $1 million is not available for kitchen equipment alone. The program sets a lower limit for equipment and leasehold improvements, so confirm the current figure with your financial institution before you plan a purchase around it.

The program also caps the cost. The maximum floating rate is the lender's prime rate plus 3%, and there is a registration fee of 2% of the loan.

Restaurants use this program more than any other sector. In 2024-25, accommodation and food services received $900.9 million, or 47.8% of the total value of CSBFP loans. Equipment loans made up 18.6% of the total.

What the financial institution looks at: the same things it would for any business loan, including financial statements, forecasts and credit history. The program reduces the institution's risk. It does not remove its approval process, so allow time for it.

Financing used restaurant equipment

Used restaurant equipment can be financed. BDC's Equipment Loan and CSBFP term loans both cover new or used equipment, and other providers set their own rules.

A used range or dishwasher costs less up front, which shrinks the amount you need to finance. It also gives a financing provider less security, because older equipment is worth less if it has to be resold.

Before you pay a deposit on a used purchase, ask each provider four questions:

1. Is there a limit on the age or condition of the equipment you will finance?
2. Do you need an appraisal, an inspection report or proof of ownership?
3. Will you finance a purchase from a private seller or an auction, or only from a dealer?
4. Are delivery, installation and any repairs included?

Compare the installed cost of the used unit against a new one, including warranty and servicing. A lower price helps less if the unit breaks down soon after it goes in.

If the answers rule out conventional financing, a merchant cash advance is one way to fund a used purchase, because the funding is based on your sales and not on the equipment.

Restaurant equipment financing with bad credit

Bad credit narrows your options without closing all of them. BDC notes that there is no specific credit score needed to get a business loan, and that financing can still be obtained with a suboptimal score when other factors, such as projections and collateral, are strong.

In practice, a weak credit history makes bank-delivered options harder to secure and pushes restaurants toward providers that weigh revenue more heavily. 2M7 bases approval on recent sales activity, and credit score is one factor among several.

For a full comparison of what each provider checks and what each option costs, read Bad Credit Equipment Financing in Canada.

Financing equipment for a new restaurant

A restaurant that has not opened yet, or has just opened, has fewer options because it has no revenue history to show.

Without revenue history, a provider relies on your business plan, your forecast and your personal credit. Have all three ready before you approach a lessor, a vendor or a bank.

When a merchant cash advance makes sense for restaurant equipment, and when it does not

A merchant cash advance is an advance on your restaurant's future sales. You receive a lump sum and repay it from revenue, with the total cost set before you sign. It is not secured against the equipment.

It has no interest rate, but it has a cost: a fixed amount set at the start. Compare that cost against the sales you lose each day the kitchen is down.

It makes sense when:

• The equipment has failed and the kitchen cannot run without it. A dead walk-in cooler or range costs you sales every day it is out, and a bank process measured in weeks does not help.
• The cost is a repair, an installation or a compliance fix. Conventional equipment financing is built around buying an asset, and these costs do not always qualify.
• You are buying used equipment from a private seller or an auction that an equipment financing provider will not fund.
• Your credit history or time in business rules out BDC and bank options, but your sales are steady.

It does not make sense when:

• The purchase is large, planned and long-lived. If you qualify for a BDC Equipment Loan or a CSBFP loan and can wait for approval, a term of up to 12 years will usually cost less than a merchant cash advance.
• Sales are too thin to carry the repayments. Funding tied to revenue only works if the revenue is there.
• The restaurant has been open less than 3 months or brings in under $15,000 a month. It will not qualify with 2M7.

The practical test is whether your restaurant can carry the repayments and still cover food, wages and rent. Run the numbers against a slow month, not your busiest one.

How to prepare before applying

Having the right documents ready shortens every one of these processes. What you need depends on the route.

For leasing, vendor financing, specialist financing, BDC or the CSBFP:

• A written quote or purchase agreement for the equipment
• Financial statements for the past two years
• A monthly cash flow forecast
• A short explanation of what the equipment will do for the restaurant: more covers, lower energy bills, fewer breakdowns
• Your premises lease, since a provider may want to know how long you can stay at the location

For a merchant cash advance from 2M7:

• Three months of business bank statements
• Photo ID
• A void cheque

Get two quotes for the equipment before you apply anywhere. A lower purchase price reduces the amount you finance under every option.

Then budget for the whole project: the equipment, delivery, installation and removal of the old unit.

How 2M7 funding works for restaurant equipment

2M7 Financial Solutions is a direct funder that provides merchant cash advances of $5,000 to $300,000 to Canadian businesses. Restaurants use the funding for ranges, walk-in coolers, POS systems, dining room furniture and compliance repairs.

To qualify, your restaurant needs to:

• Be located in Canada
• Have been operating for at least 3 months
• Bring in at least $15,000 a month in revenue
• Have no open bankruptcies

Meeting these minimums does not guarantee approval. 2M7 reviews each application.

Approval takes one business day, and funds arrive in your account within 24 hours of approval. No collateral is required.

You see the total cost before you sign. There is no interest, and there is no penalty for paying early. You choose between two repayment structures. Flex payments move with your daily card sales. Fixed payments stay the same unless you call 2M7 to request a lower amount when revenue drops.

2M7 has funded more than 5,000 small businesses and issued more than $650 million since 2008.

See how this applies to your kitchen on the restaurant equipment and operations funding page, or check if you qualify.

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Frequently asked questions

What is restaurant equipment financing?

Restaurant equipment financing is any arrangement that lets a restaurant pay for kitchen, bar or front-of-house equipment over time. In Canada the main forms are leasing, vendor financing, bank or specialist equipment financing, a BDC Equipment Loan, a CSBFP loan and a merchant cash advance.

How much does restaurant equipment financing cost?

There is no single rate. Ask each provider for the upfront cash, the payment amount, the total you will repay and any buyout. Under the CSBFP, the floating rate cannot exceed the lender's prime rate plus 3%, and there is a 2% registration fee.

Is it better to lease or buy restaurant equipment?

Lease equipment you expect to replace or upgrade, such as POS hardware. Buy equipment that will stay in service for years, such as ranges and walk-in coolers. Check who pays for maintenance and what the buyout costs before you sign a lease.

Can I finance used restaurant equipment in Canada?

Yes. BDC's Equipment Loan and CSBFP term loans both cover new or used equipment. Other providers set their own limits on age, condition and seller, so ask before you pay a deposit.

Can I get restaurant equipment financing with bad credit?

Yes, though the options narrow. BDC notes that no specific credit score is required for a business loan. Providers that base approval on revenue, including 2M7, can fund restaurants that a bank would decline.

Can a new restaurant get equipment financing?

A restaurant with no revenue history can apply for leasing, vendor financing or a CSBFP loan, which is open to most start-ups. BDC's Equipment Loan requires 12 months of revenue. 2M7 requires 3 months in operation and $15,000 in monthly revenue.

Does the CSBFP provide $1 million for kitchen equipment?

No. The program allows up to $1 million in term loans, but a lower limit applies to equipment and leasehold improvements. Your financial institution decides the amount it will approve.

How long can I take to repay a BDC Equipment Loan?

Up to 12 years. BDC also allows capital payments to be postponed for up to 24 months at the start of the loan.

Are restaurant equipment lease payments tax deductible?

The Canada Revenue Agency lets a business deduct lease payments incurred in the year for property used in the business. Confirm how this applies to your restaurant with your accountant.

How fast can I get funding to replace broken kitchen equipment?

It depends on the route. 2M7 approves applications within one business day and deposits funds within 24 hours of approval. Bank-delivered options take longer because they require financial statements and forecasts.

Does a merchant cash advance have a cost?

Yes. It carries a fixed cost of capital in place of an interest rate. Compare the amount you receive, the total you repay and how often payments are collected before you accept an offer.

What documents do I need to apply?

For most equipment financing: an equipment quote, financial statements and a cash flow forecast. For a merchant cash advance from 2M7: three months of bank statements, photo ID and a void cheque.

Choosing the right option

Start with how much time you have. If the purchase is planned and your restaurant has at least 12 months of revenue and sound credit, begin with BDC or a CSBFP loan through your bank. The terms are the longest available.

If you are buying from a dealer and want one conversation, ask for the vendor's financing terms and compare the total cost against a second option.

If the equipment has already failed, your credit is damaged, or your restaurant is too new for BDC, look at funding that is based on your sales. Check if your restaurant qualifies with 2M7.

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Canadian small business owners have never had a more complicated relationship with capital. The cost of materials is up, hiring is expensive, and the big banks, despite a series of interest rate cuts over the past year, are still not exactly rolling out the welcome mat. A 2025 survey by Equifax Canada found that 25% of small and medium business owners cited credit availability from banks or suppliers as one of their top concerns heading into the final quarter of the year. That number tells a story most business owners already know by heart.

The good news is that a parallel financial system has been quietly maturing alongside the traditional one. Alternative lending in Canada is no longer a last resort. It is becoming the first call.

The Market Is Growing Fast, For Good Reason

According to Research and Markets, Canada's alternative lending market reached an estimated $18.42 billion in 2025, following a compound annual growth rate of 16% from 2020 to 2024, with projections putting that figure at roughly $30.59 billion by 2029. Those are not niche numbers. That is a structural shift in how Canadian businesses fund themselves.

The reasons are not hard to find. According to the Bank of Canada's Business Outlook Survey for Q4 2025, business sentiment remained subdued, with firms pointing to trade-related uncertainty, slowing demand, and persistent cost pressures as their most pressing concerns. When cash flow is tight and the economic environment is uncertain, waiting three weeks for a bank decision is not a viable strategy. Businesses need answers faster, and alternative lenders have built their entire model around that reality.

What "Alternative" Actually Means in Practice

The term gets used loosely, so it is worth being specific. Alternative lending covers working capital loans, revenue-based financing, equipment financing, invoice factoring, and lines of credit. One of the most practical tools in this category is the merchant cash advance, which gives a business a lump sum in exchange for a percentage of future revenue. There is no fixed monthly payment grinding against a slow week. Repayment breathes with the business, which makes it particularly well-suited to operators with variable or seasonal revenue.

For industries like construction, retail, trucking, and food service, that kind of structural flexibility is not a nice-to-have. It is the difference between taking a contract and turning one down.

The Speed Problem Banks Still Have Not Solved

A contractor who wins a large job but needs equipment before the first draw arrives has a real and immediate problem. Alternative lenders who work with trades and construction businesses understand the cash flow cycle of that industry and can structure a deal accordingly, often with capital in hand within days. A retailer staring at a seasonal inventory window that will not wait for bank paperwork faces the same math. The problem is timing. The solution is fast business funding from a lender who understands the sector.

Speed alone, though, is not the whole value proposition. The better alternative lenders are also smarter about who they will fund.

Credit Scores Are Not the Whole Story

Traditional banks lean heavily on credit scores and historical financials. They want two or three years of clean statements, solid collateral, and a business that practically does not need a loan to qualify for one. Alternative lenders are increasingly looking at revenue patterns, bank statement trends, and business trajectory instead. A business with a rough patch in its history but strong current cash flow is a very different risk than its credit report might suggest.

That nuance matters enormously to the owner who went through a hard year during a supply chain disruption or a pandemic slowdown and rebuilt. The reality is that a lot of viable businesses carry bruised credit, and the full picture of a business cannot be reduced to a three-digit number.

Open Banking and the Technology Layer

There is a regulatory development worth watching closely. Canada's consumer-driven banking framework, commonly called open banking, is set to launch in 2026, designed to replace risky online password sharing with secure data connections and to increase competition in the financial services sector. For alternative lenders, this matters. Open banking means faster, more accurate access to financial data with the borrower's consent, underwriting decisions made in hours rather than days, and a cleaner picture of a business's actual financial health.

For borrowers, it means less paperwork. The loan application process, already streamlined by the better alternative lenders, will get faster still.

AI-powered underwriting is part of this picture too. Decisions that once required manual review are increasingly automated, and lenders are getting better at identifying creditworthy businesses that traditional models would have rejected. The businesses that benefit most are exactly the ones that have been underserved the longest: service businesses with thin assets but strong revenue, newer operators without years of statements, and owners in industries that banks have always found difficult to assess.

Sector-Specific Lending Is Maturing

A trend that deserves more attention is the rise of industry-specific lending. Generic small business loans are fine, but a lender who understands the cash flow cycle of a specific industry will structure a deal differently than one who treats every file the same way.

Trucking is a good example. Owner-operators often invoice on 30- to 60-day terms while fuel costs hit weekly. Getting capital from a lender who actually understands the trucking industry means repayment gets structured around that reality, rather than creating a cash flow problem with the solution itself. Sector fluency is increasingly a real differentiator in this space.

The Road Ahead

The trajectory for alternative lending in Canada is clear. The gap that banks leave in the small business credit market is not getting smaller. The technology powering faster and smarter lending decisions keeps improving. And Canadian entrepreneurs are becoming more financially literate about their options, less willing to accept a bank rejection as the final word.

The businesses that will thrive in this environment are the ones that treat capital access as a skill, not a crisis response. Knowing your options before you need them is a genuine competitive advantage.

2M7.ca works with Canadian small business owners across industries to find the right funding structure for their situation, whether it is their first alternative loan or their tenth. If you have questions about what the best option is for your business, feel free to reach out to us.

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