While larger banks are definitely not your best bet, you may have some good luck with smaller banks and credit unions. Small banks are much more competitive and are more likely to be flexible in catering to your needs. They also tend to carry lower interest rates on their loans, largely because they do not have the same expensive overhead costs as big banks do (advertising, extensive ATM networks, large real estate holdings, etc). Credit unions are similar to local banks, but with the added bonus of being able to shave off the profits entirely as they are mutually-held non-profit organizations. Both offer a number of programs for people who are looking for start-up business loans with bad credit in Canada.
The Canadian government also offers aid in the form of the Canada Small Business Financing Program, a branch of the Canadian government that guarantees loans, provides income support and training programs. You can seek their help at one of your local lending institutions; although they are a large guarantor of loans, they do not have any specific branches and their programs are provided through lending agencies.
Another option you may want to consider if you are looking for start up business loans with bad credit in Canada is P2P lending. P2P lending enables you to network with other individuals with lending capital and negotiate for a business deal that is on your terms. Websites such as virginmoney.com can provide you with the legal and business resources to conduct loan transactions in a professional manner. These allow you to explore the time-tested strategy of borrowing from friends, family and fools.. Article on start up business loans with bad credit in canada by Mark Karavan