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Vlad Sherbatov: My guest today
is Mario Bottone. Mario has led

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global organizations in various
sectors over the past 20 years,

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and is currently the Chief
Marketing Officer at Thinking

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Capital. Thinking Capital is one
of Canada's original FinTech

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companies, and in many ways has
transformed the way small

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businesses access capital they
need to grow. The Montreal based

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company has been around since
2006. And since then, has helped

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over 16,000 small businesses
with smarter access to

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financing. Amid the COVID-19
crisis, Thinking Capital has

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created an extensive resource
library, including the Small

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Business Health Index, which
gathers sales data on a daily

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basis from 600 merchants to
illustrate the impact on the

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Canadian small business
landscape, by industry and by

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region. Mario joins me today to
discuss the impact of COVID-19

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on the small business industry,
as well as the lending

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community, new important trends
that are emerging, as well as

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what the short and long term
economic recovery process may

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Mario, thank you so much. And
let's just dive right in. I've

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look like.

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been following the Small
Business Health Index that

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Thinking Capital has put
together, that breaks down the

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impact of COVID-19, or small
business owners, both by

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industry as well as by
geography, can you just share

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some of the main insights that
you've been able to gather so

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far from this health index?

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Mario Bottone: We started to
keep track of the potential

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impact of COVID Burley in March.
But it got obviously amplified

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pretty dramaticly over the
course of two weeks and around

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mid March, we were all caught a
bit off guard. And this is where

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we kind of took an initiative,
in light of the fact that we had

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roughly around 600 or so
merchants data on a daily basis

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that we were tracking, we
decided that at that point in

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time to kind of take a look at
what was happening with direct

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sales activities. And, of
course, we kind of wanted to

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kind of look at the progress or
the lack of progress, I would

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say from week to week, day to
day, and also benchmark it, you

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know, we had a situation where
we had to kind of figure out

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what would be a good benchmark,
we come to suggest something

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earlier in the year on February
8, in terms of the data to have

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a benchmark. But we also wanted
to kind of track what was

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happening in the short term in
terms of we want to have a

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rolling week over week type of
look of the data. And hopefully,

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at one point or another track
the recovery in the economy to a

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certain extent as well, right?
Like some of these industries at

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this stage of the game have been
able to make the giant leap to

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the next phase and kind of
conditioning themselves for

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COVID-19 world to come up
restaurants offer takeout

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opportunities to provide your
product through an E commerce

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channel. There are companies
that are better adapting to

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this, the way the data was set
up. It's kind of a combination

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of amalgamation all these types
of companies. So by no means are

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we able to parse out specific
strategies that certain sectors

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are implementing and seeing if
they're less effective, or more,

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it's anecdotal. That being said,
it still was very early on, you

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saw dramatic declines, day to
day, week over week. And when

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everything stopped specifically
for the restaurant and bar

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sector, that's where it fell off
the cliff, that are some that

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are basically adapting better
than others. So it's an

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interesting look, you know, by
no means that we have all the

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small businesses in Canada, you
know, we don't have like, four

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or 500,000, you know, merchants
reporting their daily activities

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here. But it's a snapshot. And
it still gives, you know, along

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with other information that we
provide in our resource center,

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and it's one of the first things
we did, I think we did pretty

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quickly as we started building
up something we thought was a

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useful repository for small
medium business that we could

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direct some of our customers to.
But this is an extension of

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that. We're hoping that it also
gives us the first lead

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indicators that the economy is
starting to slowly but surely

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Vlad Sherbatov: I mean, I'm
looking across the board and

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come back to.

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like you said, it may not be
capturing every business owner

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out there may not be capturing
all the tactics and how they're

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actually adapting to what's
happening. But when you compare

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them side by side, certain
things definitely jump out. Like

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for example, when you look at
the grocery sector, they are

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down but they're down only about
12% when we're looking at this

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particular week versus the
benchmark week versus average,

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it's minus 60%. And the sports
and leisure industry had an

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uptick because people are now
work to by fitness equipment.

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Can you just speak about some of
the outliers that you've noticed

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the impact and pull it is
different on them than the rest

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of the industries.

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Mario Bottone: There's winners
and losers in any crisis, right?

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In many ways, this particular
industry emerged from the

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industry that were in, emerge
from the ashes of the 2008

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crisis, right. So companies do
emerge from these types of

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situations, what's different in
this particular situation is

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that some of the companies have
to get through the storm before

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they see the light of the day
afterwards, afterwards, right.

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So there's a lot of work to be
done. The key to this situation

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is to be able to weather the
storm, and to be in a position

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of, you know, kind of adjusting
your business model to reflect

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this post COVID-19 world,
because I don't think we're ever

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going to return entirely to a
state of normalcy that we had

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prior to this place is not going
to happen. So you know, we have

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to be as an organization able to
identify, you know, those types

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of sectors that are going to be
able to survive, stabilize, and

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then potentially thrive, and
entrepreneurs across this

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country, those who've been doing
business a certain way, have to

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adapt the bounce back, or the
rebound scenario on the economy

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is going to be slow and gradual,
it's going to be a bit of a

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dance in many ways that certain
sectors of the of the economy

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opening up while others stay
quarantined. And some of these

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merchants will reemerge those
with better models that allow

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them to go through the storm and
others who are going to, you

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know, literally kind of re
emerge from this situation as a

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completely different business,
or significantly different

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business settings, probably a
more accurate way of saying it.

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So, you know, we'd look at it
and say to ourselves, okay,

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merchants that had embraced an E
commerce type of approach

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platform, are had a significant
digital footprint. Now they're

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well equipped to potentially
weather the storm. You know,

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physical businesses, such as
restaurants that provide like an

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ordering takeout option. Again,
they're probably down

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considerably in our index, which
suggests that but those who

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basically have a takeout option
at least have a lifeline, those

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businesses are our best equipped
to kind of see, see it through

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and stabilize over the course of
the recovery, which will be

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fairly long. There are local
construction businesses, who are

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going to be called upon to
retrofit establishments to abide

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by post COVID-19 regulations,
you're starting to see it right

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now and go to grocery stores,
you see these glass or plastic

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partitions that are being put
up. That in itself, is we look

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as a lender and look at
organizations that have the best

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opportunity for stabilization,
potential growth, those are

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other areas too.

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The other thing that I think is
being underestimated here, and

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it's not really, I would say,
was not in our, our sweet spot

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as a lender and talking about
the capital, but is something

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that has been emerging over the
last five to 10 years, and it's

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going to become more prevalent,
I think, in this new world is

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the gig economy workers. They'll
technique to you know, in some

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instances, or one or two people
shops, maybe they'll have to be

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three, four or five, they'll
have to make some investments,

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because now you can see a lot of
our traditional businesses

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needing to require new skill
sets, whether it is to get an E

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commerce site, or additional it,
maybe some specialized

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marketing, digital marketing,
some logistics, some physical

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Embarkment or retrofits for
their product, or their weather

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stations and how they deliver
their product. All those

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different elements now will make
for smaller workers, smaller

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sized organizations or gig
economy type workers to be

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potentially more solicited. And
those are type of organizations

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that might need to invest to
handle more demand for their for

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their services. And the other
thing too, is, you know, in

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light of some of the issues with
supply chain, we all experienced

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that initial shock of going to
Costco and seeing that we're

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running out of toilet paper and
other products. Try to find a

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Lysol wipe somewhere it's
impossible. There's gonna be a

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greater dependency moving
forward on doing something

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related to local supply and
manufacturers and distributors,

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I can ensure local suppliers and
businesses might be able to

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benefit from some of these
changes that are occurring.

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Vlad Sherbatov: We actually did
a survey a few weeks ago. And we

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served a couple of 1000 business
owners that are in our database.

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And we just asked them about
their situations. And in the

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very end, we also asked them to
just share sort of their story,

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you know, if they're
comfortable, because we just

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wanted to see sometimes it
doesn't come through and stats,

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what the builds business or
actually experiences, we asked

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him to share some stories. And
there were so many cases that I

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read, where a business was
actually set up here. And it

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could be in the manufacturing
space, for example, or something

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in the construction related
field, that they were actually

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able to work. But the problem
was that they were expecting

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materials to come in from
somewhere else. And that was

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literally the only sort of
barrier to them actually getting

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through this crisis, you know,
they didn't get shut down here,

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they were able to stay at home,
they don't have a retail store,

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they don't need it, but they
just couldn't get the materials,

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they couldn't do the work.

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Mario Bottone: Exactly, exactly.
I think that's also gonna be a

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major consideration in terms of
how we reopen the economy, is

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what access you do have in terms
of supply. As I mentioned

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earlier, there's no quick fix to
this. And I think the fix is

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really figuring it out from the
health perspective, ensuring

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greater testing quarantine
people faster, more effectively,

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and letting people come back to
work, socialize, with less

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concerns about whether they're
getting this thing. There's so

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many things emerging in terms of
information right now, I'm gonna

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help friends. And I suspect in a
couple of months from now, you

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know, we're gonna go much, much
more, much more testing. And

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that's when we'll feel a little
bit more confident that we truly

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are not going to get really true
back to the normal situation, we

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were back in, let's say my first
term in February when until we

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have the vaccine, I suspect.

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Vlad Sherbatov: Right. Mario,
you talked a little bit about

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how everybody sort of needs to
adapt. And that includes the

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lenders as well. And we all know
that access to capital is so

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important for small business
owners and small business

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owners, really anybody in
Canada? So what are you

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currently doing with your
current customers that are

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coming to you and calling you
and saying, Hey, I have a loan

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outstanding? This is my
situation? How can you guys help

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me? And my second question is
post crisis, how does a business

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owner think about now in terms
of setting themselves up to be

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eligible for financing in the
future and have a type of

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business structure and systems
in place that will make them

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attractive to a lender, for
example, like thinking capital,

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so they will be able to access
the working capital that they

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need in the future?

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Mario Bottone: Well, the answer
to your first question is, you

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know, we've, we've been finding
ways to extend loans, reduce

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payments, accommodated some of
the cash flow restrictions that

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our customers have. So I think
we owe it to them. Our senior

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lenders have been very
accommodating as well. So in

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many ways, we've been paying it
forward in terms of the type of

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understanding that everybody has
at this stage, the game, this is

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something that one could have
predicted, especially small

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businesses who are so tight, and
Representative big portion of

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our economy.

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The challenge we'll have is that
what worked pre COVID might not

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necessarily work post COVID. And
we're going to have to figure

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out, you know, based on
conditions that we think are

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going to prevail, have a bit of
a crystal ball, we got to look

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at companies differently.
Certainly we want to look at

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businesses that were able to
make it through the crisis,

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because they had something to
offer that sustained itself, and

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are probably in the best
position to take, you know, to

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take the situation and just
evolve and good business owners

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good business practices, a well
known presence may be in a

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certain community, good customer
base, you name it, those are

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type of organizations are going
to, I think continue. I'll be

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it, you know, probably hurt by
this, but probably continue. And

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we want to look at them maybe in
similar ways. But it is also

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about looking towards the future
and getting a better

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understanding as to which which
of these organizations are best

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suited to take advantage of some
of the emerging trends I

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mentioned earlier. Right. So
yeah, we'll be evaluating them

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differently. There's no question
the risk model we had before

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will have to be adjusted to
reflect this post COVID economy.

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Vlad Sherbatov: Do you think
that in addition to just the

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risk model, there will also be
changes to the actual product

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offerings, I mean right now in
the industry, some of the

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primary small business financing
options, you have a term loan,

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you have a merchant cash class,
maybe a line of credit as well.

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Do you think that there will be
sort of evolution of product

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offerings as well, most of the
surprises?

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Mario Bottone: That's a very
good question. I think there

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will be adjustments made, I
think the primary vehicles are

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going to stay similar. So there
might be adjustments made

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accordingly, to reflect some of
the intricacies associated with

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an economy that's emerging, you
know, maybe there's more risk

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sharing, potentially, in certain
circumstances, more guarantees

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that need to be offered in some
instances. But that being said,

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I don't think there's going to
be dramatic changes, I think

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there's just going to be a
different way of applying them,

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perhaps to these to these
organizations, and how we

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evaluate risk is going to
change, that's for sure. You

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know, somebody in my entourage
said the other day that

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restaurants have been around for
4000 years. So they'll be around

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after this too. They might be
different, they might have to

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abide by certain codes and
approaches. But there's still

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the need for people to get
together and have a meal. We

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just got to figure out which
ones have the best chance of not

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only being sustained through
this process, but also thriving

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in a new model, a new a new post
COVID economy.

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Vlad Sherbatov: What do you
think, is the role of the

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FinTech online lending community
as a whole and I know Thinking

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Capital is one of the one of the
oldest players in the game, you

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know, so I've even heard
somebody say that they were they

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were FinTech, before FinTech
kind of became a word. So I

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would like to know from your
point of view, what is the

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responsibility or the role that
the that the online FinTech,

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small business lending community
should have? Or has right now to

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help us as a country sort of get
through this period?

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Mario Bottone: In general, if
you look at the fact that the

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natural reaction everywhere, is
to try to tap on the shoulders

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of the banks and say, Can you
help us? Remember the

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government's here. Can you help
us get the money to the right

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hands? Well, FinTechs are
uniquely positioned because we

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deal with these small businesses
on a day in and day out basis,

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we're talking to them, they're
calling us. And we have the

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mechanisms and the technology to
get the money to them within a

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period of time. That's extremely
reasonable. So we're hoping that

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we can be a big player in this,
in all this. That being said,

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this is about helping Canadian
small businesses. And we believe

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that the answer is technology.
Really, the answer is processes

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that go between 48 and 72 hours
from application through

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disbursement of funds, we want
to make sure that we're a

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solution that the government
could utilize the agencies can

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utilize to get the monies to the
right people at the right time,

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isn't going to happen, we're
hoping, we're definitely gonna

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be there for the recovery. But
we'd like to be there during the

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storm as well.

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Vlad Sherbatov: I think that's
really great. And I get to see

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the letter that you did with the
OnDeck. And, and I think that

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common goal that we have for the
entire end for the entire

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economy to really be bound is
how all the different even

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competitors are rallying
together. And because we all

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have that common objective, and
I think that was really, really

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great to see, I'm actually very
proud of the way that our

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industry has responded so far,
overall. And they're in a very

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proactive way, not just human on
the business lending side. But

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even on the consumer lending
side. There's so much great

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information that you've shared,
I want to really, really thank

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you for your time. And for these
insights.

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Mario Bottone: Thank you for
this. Well, I think we need to

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be confident that the economy
will get back on its feet one

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day, we just need to figure out,
you know, who will be best

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suited to kind of take advantage
of these new dynamics that we're

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going to have to face. And
that's, I think, the goal of

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this, of this financing
community now, look at the world

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a little bit differently than we
did before.

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Vlad Sherbatov: Thank you so
much for your time, Mario once

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again, and I hope you have a
great rest of the day.