Not every borrower fits inside a traditional bank box. When income is hard to document, credit needs work, or a deal is unusual, B lending and private lending fill the gap. Here is what these terms actually mean.
A lenders versus B lenders
A lenders are the banks and major trust companies, subject to strict federal lending rules and the mortgage stress test. B lenders are alternative lenders, often trust companies or monoline lenders, that offer more flexible qualification while still being regulated institutions. Private lenders sit outside both, funded by individuals or private pools of capital, with the most flexible underwriting and the highest rates.
Who ends up in B lending
Self employed borrowers whose declared income is lower than their actual cash flow. Borrowers with recent credit issues like a past bankruptcy or consumer proposal. New immigrants without a long Canadian credit history. Borrowers with non traditional income like commission, rental, or investment income that A lenders discount heavily. People needing a bridge or short term solution while their file gets stronger.
What is different about a B lending deal
Rates typically run one to two points above prime A lending rates. Most B lenders also charge a lender fee, commonly around one percent of the loan amount, on top of the rate. Terms are usually shorter, often one to three years, since the goal is usually to improve the file and move back to A lending later. Qualification looks at the full picture of a borrower's finances rather than a strict income multiple.
Why brokers need to understand this space
A client who does not qualify at a bank is not a dead file, they are a B lending or private lending opportunity. Brokers who only work the A space turn away a meaningful share of potential clients. Knowing which B lenders specialize in self employed income, which are best for bruised credit, and which move fastest for time sensitive deals is a real skill that sets experienced brokers apart.
A common misconception
B lending is not a last resort for bad borrowers, it is a normal part of the Canadian mortgage market built around real underwriting gaps left by strict A lender rules. Many strong, high income self employed clients end up here simply because their tax filings do not reflect their actual earnings.
Getting it right
The right lender for a B deal depends on the exact reason a client does not fit A lending, so matching the file to the lender matters as much as the rate. At A.I.M.I. Collective, brokers have access to a full panel across A, B, and private lending, along with underwriting support to structure these files correctly the first time.
If you are a borrower who has been told no by a bank, or a broker wanting to build confidence in alternative lending, we are happy to talk through options.
Related reading
- Mortgage Agent Level 1 vs Level 2 in Ontario, why Ontario agents need Level 2 for private deals
- Our lender panel across A, B, private and alternative
- New mortgage broker with no clients, your first 90 days