Answers

Are merchant cash advances legal in Canada? A plain answer.

Yes. Merchant cash advances and revenue-based financing are legal commercial financing arrangements in Canada. They are business-to-business contracts, so the protections that apply to consumer loans generally do not apply in the same way, which makes reading the agreement important.

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Are merchant cash advances legal in Canada?

Key facts

Legal commercial contracts between a funder and a business
Consumer cost-of-borrowing rules are built for individuals
The Criminal Code criminal interest rate was lowered in 2025
Always read the full agreement before signing

Commercial, not consumer

A merchant cash advance is a contract between a funder and a business. Canadian consumer lending rules, such as provincial cost-of-borrowing disclosure for personal loans, are designed for individuals. Business financing operates mainly under general contract law and commercial statutes. That means you have fewer automatic protections and more responsibility to understand what you sign.

The federal Criminal Code sets a criminal rate of interest that applies to agreements for credit generally, and it was lowered in 2025. Whether and how it applies to a particular merchant cash advance depends on the agreement's structure and is a legal question. If you have concerns about a specific agreement, ask a lawyer.

What protects you

Clear written terms: total repaid, payment method, fees and reconciliation rights.
Your right to take time and get independent advice before signing.
Provincial personal property security registries, which make any registration against your business public and checkable.
Working with funders who answer questions in writing.

Signs to walk away

Pressure to sign immediately.
Refusal to state the total repayment in dollars.
Terms that differ between the offer and the agreement.
Requests for upfront fees before funding.

Where Canadian files usually start

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

If your question is about your own file rather than the general rule, the fastest route to a specific answer is a review. Send a signed application and your last four months of business bank statements, mention this question in a note, and the response will address it directly. You can also call (305) 384-8391 and ask before applying; there is no cost to ask.

Questions owners ask next

Sources and review

Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.

Common questions

Is a merchant cash advance a scam?

No. It is a legitimate product, though terms vary widely. Read and compare.

Who regulates business funders in Canada?

There is no single regulator for merchant cash advances. Contract law, commercial statutes and the Criminal Code provide the framework.

Should I have a lawyer look at the agreement?

For larger amounts or unusual terms, yes.