What are the rates and down payment on a commercial loan in Quebec?

The rate on a commercial loan changes from one application to the next. So does the down payment. This guide explains what moves them and gives the benchmarks BDC publishes.

Rates quoted online are good for one day and one application only. Rather than promise a number, this guide describes how the pricing works.

How is the rate on a commercial loan set?

The lender starts from its own cost of funds, then adds a margin for the risk it sees in your application. The higher the risk, the wider the margin.

The Bank of Canada policy rate is a starting point, not your loan rate. According to the Bank of Canada, it stands at 2.25% after the September 2, 2026 decision left it unchanged.

Between that policy rate and the rate you pay, the lender applies its own margin. That margin is not public and differs from lender to lender.

According to BDC, commercial mortgages are riskier for both lenders and borrowers. They therefore usually carry higher rates and fees than a residential mortgage.

What makes the rate vary?

Here is what lenders weigh most often, based on the BDC pages consulted on October 13, 2026.

• Cash flow, which BDC describes as the most important indicator for a bank.
• The value, age and condition of the building, which also shape the financing offered.
• Financial statements for the past few years, and the business plan.
• The credit score of the business and of its owners.
• The share of capital you invest yourself.

A building that is harder to resell worries a lender more. BDC notes that this type of property can be harder to liquidate.

How much down payment should you plan for?

BDC writes that you can expect a down payment of 20% or more of the purchase price. It adds that the figure can be higher or lower depending on the lender, the financial health of the business and the building.

A BDC representative quoted on its page says the institution starts from a loan-to-value ratio of 85%. Loan-to-value compares the loan to the value of the building.

Here is a made-up example, for illustration only. On a $1,000,000 building, a loan at 75% of value leaves a $250,000 down payment. A loan at 85% brings it down to $150,000.

In another article, BDC says banks typically finance 75% to 100% of the value of a commercial property purchase. The spread depends on the building's condition, age and other factors.

If the down payment comes from a home equity line of credit, BDC says to plan for 40% to 50%. The lender factors that in.

What costs come on top of the rate?

The rate does not tell the whole story. BDC states that ongoing annual costs usually run between 0.5% and 1% of the loan amount.

Appraisal, legal and survey fees may be added. Ask for the full list in writing before you sign.

BDC also points out that many commercial loans are call loans. The lender can then demand repayment at any time. Check this point in your contract.

Finally, keep a reserve. BDC considers it common to set aside 10% to 15% of the purchase price for surprises.

Fixed rate, term, amortization: what should you look at?

According to BDC, banks offer fixed rates for terms from one to ten years. The rate is then locked for the term, not for the whole life of the loan.

Amortization is the time it would take to repay the loan in full. BDC says commercial amortization is usually 20 years or less, shorter than on the residential side.

A shorter amortization raises the payment. A longer one lowers it but increases the total interest paid.

The Financial Consumer Agency of Canada notes that the type of lender influences the rate offered. Comparing several lenders can save thousands of dollars.

It also warns that breaking a contract early can trigger penalties. Read that clause before you pick a term.

How do the down payment and the rate interact?

The larger your down payment, the less the lender risks. It may then offer better terms, but nothing requires it to.

A small down payment, on the other hand, often calls for extra security or stronger income. The debt service coverage ratio is then examined closely.

BDC states that loan size depends first on cash flow. If income is too thin, the required down payment goes up.

An offer is compared across several lines at once. Set the rate, term length, amortization, required down payment and the list of fees side by side.

A lower rate can hide higher fees or a heavier penalty. Conversely, a slightly higher rate may come with more flexibility.

Also ask how long the offer stays valid. A rate offered today does not necessarily hold until the purchase closes.

What should you do next?

Start by gathering your financial statements, the target price and a budget for side costs. Every application uses these documents.

Then work out your down payment at 75%, 80% and 85% of value, without assuming what any lender will accept.

PMECAP is a free comparison site. It does not lend and does not post rates. Its request form is passed to a mortgage brokerage firm registered with the AMF.

To go further, read the guide on the debt service coverage ratio and PMECAP's commercial financing family. Final terms always come from the lender.

FAQ

Sources

• BDC – Qu'est-ce qu'une hypothèque commerciale (glossaire) (accessed October 13, 2026)
• BDC – Get the right level of financing for your real estate project (accessed October 13, 2026)
• BDC – How a bank looks at your business (accessed October 13, 2026)
• Banque du Canada – Taux directeur (accessed October 13, 2026)
• ACFC – Choisir le bon prêt hypothécaire (accessed October 13, 2026)