Weekly-repayment business financing: how it works and how to compare its cost

Weekly-repayment business financing is credit repaid in equal instalments taken from the business bank account once a week, by pre-authorized debit, until principal and interest are cleared. Each instalment pays the interest that built up on the unpaid balance that week and retires some principal, so the balance falls from the first debit. Monthly-repayment financing works the same way, one debit a month.

On Backers, the borrower is the business and the lenders are investors. A corporation issues a fixed-rate note of $25,000 to $500,000 under the start-up crowdfunding exemption, members of the public fund it, and Backers, as the funding portal, holds their subscriptions in trust, collects the debits and passes the repayments on. Backers does not lend its own money, and notes are offered to corporations only.

• Coupon: a fixed annual rate set by an approver at review, inside the range for the term. The business does not choose it.
• Origination fee: a one-time percentage of the loan set by term (1.79% for 3 months, 3.29% for 6, 6.89% for 12 and 9.99% from 24 months), taken once from the money the business receives at funding.
• Servicing: 0.29% per month of the balance still owed, included in each instalment. It covers all routine processing, so there is no per-debit fee and no returned-payment fee.
• Nothing else: no application fee, no access fee and no late fee.

Every rate and fee is listed on the business financing terms page. A business carrying costs while it waits on a tariff-relief contribution should also read the RTRI guide: the agency and Backers assess the contribution and the note separately, and the note is owed whether or not a claim is paid.

A Backers note's cost has three parts, each set as a rate: the coupon, which investors earn on the balance still owed; the origination fee, a one-time percentage of the loan taken from the advance at funding; and servicing of 0.29% per month of the balance still owed, which Backers keeps.

Every instalment is the same amount except the last, which absorbs rounding, and each one covers the coupon, servicing and principal together. The pre-authorized debit agreement states the exact debit amounts and the number of debits before the note goes live, and the business repays the face amount of the note, not the smaller amount it received after the fee.

A shorter term costs less in dollars, because the origination fee is the same or smaller and interest and servicing run for less time, but each instalment is larger. That trade-off is the one to hold against any other offer, using the method in the next section.

A factor rate is a multiplier on the amount advanced, not an annual rate. Merchant cash advances and many short-term business loans quote one: a 1.20 factor on $50,000 means $60,000 is repaid, a $10,000 charge however long repayment takes.

The factor is the same whether repayment takes 12 weeks or 48, but the cost per year is not. With weekly repayment, principal starts coming back in the first week, so on average the business has only about half the advance over the term. The same $10,000 charge on a smaller average balance, over a shorter time, is a much higher annual rate.

1. 1

   Step 1: Start from the money received

   Use the cash that actually reaches the business account, after every fee deducted up front. Section 347 measures the rate on this amount, the credit advanced^[1].

2. 2

   Step 2: List every debit

   Write down each debit, including any servicing or administration fee taken with it.

3. 3

   Step 3: Find the periodic rate

   In a spreadsheet, =RATE(debits, -debit, money received) returns the rate per period. For the 24-week row above, =RATE(24,-2500,50000) returns about 1.51% a week.

4. 4

   Step 4: Annualize it

   Add one to the periodic rate, raise it to the number of periods in a year (52 for weekly debits, 12 for monthly) and subtract one. The result is the effective annual rate.

5. 5

   Step 5: Convert it to the Criminal Code APR

   Add one to the effective annual rate, take the twelfth root, subtract one and multiply by 12. For agreements made on or after January 1, 2025, this monthly-compounded figure is the APR that section 347 tests^[4].

Whatever a provider calls its price, ask in writing for the annual percentage rate on the money the business receives, with every charge included. Canadian criminal law counts every fee as interest, whoever receives it^[1], so the fair comparison puts every offer on that same base.

Canada's criminal interest rate is 35% APR on the credit advanced, in force since January 1, 2025^[1]. It replaced a ceiling of 60% measured as an effective annual rate, which the government's own analysis put at roughly 48% APR^[3].

Business credit gets a higher ceiling only when three conditions all hold: the borrower is not a natural person, the borrowing is for a business or commercial purpose, and the credit advanced is more than $10,000 and no more than $500,000. Credit that meets all three may run up to 48% APR. Above $500,000, with the first two conditions met, section 347 does not apply at all^[2].

Under section 347, interest means every charge paid for the credit, whether it is called a fee, fine, penalty or commission, and whoever receives it. Credit advanced is the money actually advanced minus any such fee, so the $10,000 and $500,000 thresholds apply after an origination fee comes off^[1].

The commercial exemption leaves out individuals on purpose. The government's regulatory impact analysis says many sole proprietors borrow much as consumers do, which would have opened a loophole^[3]. Credit to a sole proprietor stays under the 35% ceiling, even when the money is for the business.

Entering into, offering or advertising an agreement to receive interest at a criminal rate is itself an offence, punishable on indictment by up to five years in prison^[1].

On Backers, the pricing code tests every note against the 48% ceiling at approval, counting the origination fee and servicing on top of the coupon, and refuses a rate that would breach it. Backers business notes are for corporations only, because their pricing relies on the commercial ceiling. If a note ends early through acceleration, the amount demanded is tested again over the time the money was actually outstanding, and reduced out of Backers' own origination fee if it would otherwise exceed the ceiling.

On a Backers note of 3 or 6 months, the first instalment falls due 7 calendar days after the money released to the business settles at its bank, and each later instalment falls due 7 calendar days after the one before. On a note of 12, 24, 36, 48 or 60 months, the first instalment falls due one month after settlement and each later one on the same day of the following month, or the last day of a shorter month. Each is collected on a banking day on or after its due date.

1. 1

   Step 1: The note fills

   A Backers note is all-or-nothing: investors must fund the full face amount before it can close.

2. 2

   Step 2: Withdrawal windows run out

   Each investor can withdraw until midnight on the second business day after investing, so the money stays in trust until every window has passed.

3. 3

   Step 3: The money is released

   Backers releases the funds to the business, net of the origination fee, under a two-person approval.

4. 4

   Step 4: The schedule starts

   The repayment schedule is created when that disbursement settles at the bank, not when the note closes. The first instalment falls due 7 calendar days later on a weekly note, or one month later on a monthly note.

The business pre-authorized debit agreement, signed before the note goes live, states the debit amounts, the number of debits, the frequency and that timing rule. The dated schedule appears in the business's workspace once the disbursement settles.

On Backers, a missed instalment is still owed in full but costs nothing extra: no late fee, no added interest and no change to the coupon. It is collected in a later debit file, one instalment per file and oldest first, so a missed instalment and the current one never come out in the same file.

A debit that is returned for insufficient funds can be presented again once, within 30 days, for exactly the same amount. Payments Canada's Rule H1 forbids adding interest, NSF charges or any other charge to that second attempt^[5]. Backers charges no fee for the returned debit either: there is no returned-payment fee on a Backers note.

If a re-presented debit is returned as well, Backers can open a default case. That accelerates the note: the whole unpaid balance becomes claimable at once, the scheduled debits stop, and the investors who hold the note are notified.

Loan debits from a business account, weekly or monthly, are Business PADs under Payments Canada's Rule H1, the rule that governs pre-authorized debits in Canada. Rule H1 counts corporations, partnerships and sole proprietorships alike as businesses^[5].

• Reimbursement: if a debit was not authorized or does not match the agreement, the business can ask its financial institution for reimbursement within 10 business days of the debit. A personal PAD gets 90 calendar days; a Business PAD does not^[5].
• Cancellation: a payor can cancel a PAD agreement at any time on notice, and the notice period cannot be longer than 30 days^[5]. Cancelling stops the debits; it does not cancel the debt.
• Re-presentment: a debit returned for insufficient funds or funds not cleared can be presented again once, within 30 days, for the same amount and nothing more^[5].
• Notice of each debit: Rule H1 lets the parties waive advance notice of each debit if the waiver is displayed prominently^[5]. The Backers agreement waives it in bold, only for the exact amounts, frequency and timing rule it states; a new or larger amount needs a new authorization or the advance notice Rule H1 otherwise requires.

No. A Backers note has no voluntary prepayment: it runs its full term of instalments. A business whose circumstances change should contact Backers at team@backers.ca, and can file a payment-plan request from its workspace.

That makes the term the decision that sets the cost. A shorter term carries the same or a smaller origination fee and less interest and servicing in total, but a larger instalment. The term to choose is the shortest one the business's cash flow can carry.

To see whether a note fits, start with Get Backers; the business financing page explains what is reviewed and what the business signs. For how investors see the other side of the same note, read investing in business notes.