Get a free, no obligation personal loan quote with rates as low as 6.99%
Get Started You can apply with no effect to your credit score

Essentially, a demand loan, otherwise known as a “call loan” or Working Capital Demand Loan (WCDL) is somewhat similar to a traditional term loan, meaning you can borrow a lump sum of money from various lending institutions across Canada and repay it gradually through installments. 

How Does A Demand Loan Work?

A demand loan gives your lender the right to request full or partial payment from you at any given time. This condition will be specified within your loan contract, which may be a bit more complex than that of a regular loan. 

Also different from a traditional installment-based loan, demand loans are often used for investment purposes, rather than personal expenses. Since these sorts of investments carry more risk for the lenders involved, they want to be assured that they can ‘demand’ payment whenever they feel it’s necessary. 

Should you incorporate your business provincially or federally?

What Can You Use A Demand Loan For?

In order to be approved for a favourable and cost-effective demand loan, you’ll first need to build a solid relationship with your chosen lender. Why do you ask? Because, as mentioned, the funds you acquire are usually meant for more significant things than your everyday expenses, including but not limited to:

  • Partnership loans
  • Investment programs/loans
  • Short-term business financing
  • Bridge financing
  • Temporary working capital
  • Financing small assets (vehicles, business equipment, etc.)
  • Renting or leasing new properties (offices, farms, etc.)
  • Repaying various short-term liabilities

All this said, you can use your demand loan to finance plenty of other expenses and ventures. Just make sure you clearly understand how this product can alter your current financial health, assets, and lifestyle as a whole. 

Learn how to protect yourself from a business loan scam.

When Should You Use A Demand Loan?

Now that you know what demand loans are commonly used for, let’s talk about when the best time to apply is. Remember, demand loans may pose a lot of risk for both you and your lender. After all, your lender can choose to recall your loan at any time and both parties can experience financial turmoil if you end up defaulting on your payments. 

Therefore, it’s best to apply when you have strong finances and healthy credit history, not to mention a longstanding rapport with your bank, credit union, or other lending facility. Additionally, consider the fact that demand loans are typically used to finance short-term goals. 

As such, you should only take out a demand loan if you’re planning to use the funds for something that your lender considers a worthwhile venture and when you’re financially prepared to cover your full balance whenever they request payment. 

Whether you’re trying to finance a small business or invest in something else that’s important to you, the key is to do it when you’re financially stable, looking for a flexible payment alternative, and are well aware of all the potential dangers involved.

Need help deciding when and how to open a business bank account?

Who Can Use A Demand Loan?

As you can imagine, demand loans are not for everyone. In fact, they can be quite difficult to get approved for if you’re a relatively new credit user. Generally speaking, banks and other prime lenders will only consider clients that have been borrowing responsibly from them for several years and are truly qualified to handle their debt.

Examples: 

  • Homeowners
  • Landowners
  • Small business owners
  • Entrepreneurs 
  • Shareholders 
  • Venture capitalists

Make sure you avoid these business loan application mistakes.

What Are The Benefits Of A Demand Loan?

Being that your lender is able to ask for payment whenever they deem it necessary, the idea of a demand loan can seem quite nerve-racking at first. However, there are plenty of different benefits that can accompany this credit product, including but not limited to:

  • You won’t have to follow a set repayment plan
  • You’re allowed to repay your loan at any time without penalty, which is typically not  the case with a traditional term loan
  • If you’re qualified, you can borrow as much as you want, whenever you want, until the lender demands payment 
  • Similar to a line of credit, interest is only applied to the money you actually use, rather than on the full loan amount
  • Repayment terms may only last one week to several months, which can be more appealing than being in debt for years at a time 
  • Most lenders will allow you to secure your loan using different kinds of collateral, such as stocks, land, buildings, or other assets
  • Offering collateral can help you get approved for more credit, lower interest rates, and better overall conditions

Is A Demand Loan Right For You?

Depending on your needs as a business owner and the financing needs of your company, a demand loan could be the right option. If you’re interested in learning about your other business financing options, Loans Canada can help.


Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

More From This Author

Special Offers

More From Our Experts

https://loanscanada.ca/wp-content/uploads/2023/09/GlobeMailTopCompanies2023-1.png
Loans Canada places No. 228 on The Globe and Mail’s fifth-annual ranking of Canada’s Top Growing Companies.

By Caitlin Wood, BA
Published on September 29, 2023

Loans Canada is excited to announce it has made it onto the Globe and Mail’s Top Growing Companies list for the second year in a row.

https://loanscanada.ca/wp-content/uploads/2023/09/Finder-Awards.png
Finder Awards Finalists: Personal Loans Customer Satisfaction Awards 2023

By Priyanka Correia, BComm

Loans Canada is happy to announce it received the finalist award in the Best Personal Loan Search Platform category.

https://loanscanada.ca/wp-content/uploads/2016/12/caution-1.jpg
Beware of Fraudulent Lenders Impersonating Loans Canada

By Caitlin Wood, BA

A note to our clients about fraudulent lending practices and illegal upfront fees.

https://loanscanada.ca/wp-content/uploads/2021/06/BC-Disability-Assistance.png
Do You Qualify For Disability Assistance In BC?

By Matthew Taylor

The BC Disability Assistance Program provides monthly disability assistance payments to people with the Persons with Disabilities (PWD) Designation.

https://loanscanada.ca/wp-content/uploads/2024/05/high-ratio-mortgage.png
High Ratio Mortgages And Default Mortgage Insurance

By Sandra MacGregor

Are you putting less than 20% on your home? Then you'll have a high-ratio mortgage. Find out how that'll affect the amount of default insurance you'll...

https://loanscanada.ca/wp-content/uploads/2013/10/Explaining-Foreclosures-In-Canada-1.png
How Do Foreclosures Work In Canada?

By Lisa Rennie

Missed mortgage payments can result in foreclosure, which can leave you without your home. Learn more about how foreclosures work in Canada.

https://loanscanada.ca/wp-content/uploads/2017/12/how-to-avoid-cmhc-fees.png
How To Avoid CMHC Fees In Canada

By Lisa Rennie

Want to avoid paying CMHC fees? We have the tips and tricks you need on to avoid paying CMHC fees in Canada.

https://loanscanada.ca/wp-content/uploads/2024/05/federal-budget-2024.png
2024 Federal Budget: Making Homeownership More Achievable

By Sean Cooper

Check out the Federal Budget 2024 initiatives made to make housing more affordable and accessible in Canada.

Recognized As One Of Canada's Top Growing Companies

Loans Canada, the country's original loan comparison platform, is proud to be recognized as one of Canada's fastest growing companies by The Globe and Mail!

Read More

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Free
Service
Expert Tips
And Advice
Exclusive
Offers

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.

Koho Prepaid Credit Card