“Cheapest” requires a full cost comparison
I would not rank financing by the advertised rate alone. The cheapest option is the one with the lowest appropriate total economic cost after interest, fees and other charges, while still matching the business need and repayment capacity.
Secured or well-supported conventional financing may price differently from unsecured or faster alternative financing, but eligibility and terms vary. Equipment-specific financing may make sense for an equipment purchase even when another product advertises a lower-looking number.
Convert every offer into comparable numbers
For each offer, I want to know how much cash the business actually receives, every required payment, payment dates, all fees, total repayment and any end-of-term balance. I also examine early repayment rules.
This is particularly important when comparing an annual interest rate with a factor rate or fixed-fee product. They are different pricing conventions. A factor rate should not be presented as if it were an annual percentage rate.
A current government-program reference point
For CSBFP term loans, ISED currently caps variable interest at the lender's prime rate plus 3%, while fixed-rate loans are capped using the lender's single-family residential mortgage rate plus 3%. The program also has a 2% registration fee. Lines of credit under the program have a different maximum rate formula.
Those rules apply to CSBFP financing, not every business loan in Canada. I use them as factual program terms, not as a claim that a particular applicant will receive that financing.
The cheapest loan can still be the wrong loan
If a low-cost facility takes too long for a genuine deadline, finances the wrong purpose, or requires conditions the business cannot meet, its nominal price is not the whole decision. Conversely, urgency is not a reason to ignore expensive repayment terms.
I tell owners to solve for fit first, then cost: right amount, right purpose, manageable repayment, transparent economics.