Filling The Funding Gap for Canadian Borrowers

“Generally, capital availability is usually stronger in the U.S., but I would say Canadian businesses are definitely less serviced when it comes to options to be able to access capital,” said Cato Pastoll, Founder and CEO at Loop. “There’s just kind of less services or less products out there for companies so that definitely means that there’s going to be more demand for loan related products.”

One of the lingering challenges in Canada is that the big banks tend to hoard the data that would be valuable to fintechs to service more borrowers, hence the recurring call for open banking.

“If you’re a fintech and you don’t have access to that information, you have to figure out a way to access it from the banks that do hold it,” said Tal Schwartz, Senior Product Manager at Nomis Solutions and Writer at Canadian Fintech. What’s happened as a result is that a whole cottage industry has formed to figure out ways to relay data without APIs.

Cato Pastoll’s company, Loop, is among those that have come up with clever solutions to service Canadian customers. For example, Loop can help Canadian-based companies obtain loans in U.S. dollars to help them grow while also offering other services like expense management tools and cross-border payments.

“A lot of businesses have a hard time getting financing from the bank,” Pastoll Said, “so there’s definitely a few players that do provide different products to help companies be able to access growth capital, working capital, and many of them have been around as long as we have for the last five to ten years or so.”

“So, things that can probably improve in Canada are all related to competition, law, and kind of creating a more equal playing ground between banks and fintechs,” said Schwartz. Although those initiatives seem to be trending in the right direction, it’s been a very a slow march forward.