Canada

Back to Business Lending in Canada

“There’s a need for products and services like ours across all cycles,” said Cato Pastoll, CEO of Loop, on the small business lending panel held at the Lenders Summit this week in Toronto.

It’s unclear what cycle the industry is in exactly. The Lenders Summit, put on every year by the Canadian Lenders Association, was not only sold out but packed wall to wall with more than 500 attendees. The tone was relatively upbeat despite Canada’s key interest rate holding steady at 5% and economic headwinds blowing in the background.

OnDeck Canada COO Harley Greenspoon said that his company just had their best October in four years and that they’ve returned back to pre-pandemic growth. “Demand is actually not the issue at all,” Greenspoon said.

Not only is the demand for business loans there but OnDeck Canada has not had to pass on the rising costs of capital thanks to greater efficiencies unlocked by reducing headcount and increasing automation.

Lauren Thompson, VP of Specialty Finance for Peoples Group, whose organization partners with fintechs and lenders, said that from a bird’s-eye view banks would probably continue to restrict capital being loaned to small businesses for the foreseeable future. “I don’t think that small businesses are best served through the traditional banking system,” said Thompson.

Pastoll of Loop pointed out an irony with this, that banks tend to under serve the underserved when they actually need it most. “90% of the private sector workforce is employed by small businesses so if you want to stimulate the economy, we as fintechs can do it faster…” Pastoll said.

Thompson explained that the traditional financial system can be hamstrung by reviewing data that is already stale such as financial reports that reflect a moment in time six months ago while a fintech lender has more of a live pulse on what’s going on.

Greenspoon of OnDeck Canada, for example, could rattle off the top of his head industries that are experiencing challenges, the most notable being transportation.

Finally, Pastoll was asked if Loop had contemplated ever having to deal with a high interest rate environment back when he founded the company almost nine years ago. Pastoll explained that his whole inspiration for founding Loop in the first place was to help small business owners precisely during difficult times. Both of his parents were small business owners and he had watched firsthand how hard it was to find financing.

“Again, I just think about what my parents had to go through,” he said.

Have You Heard of Jeeves?

Founded in 2020, the expense management platform Jeeves, recently won the Small-Medium Sized Business Lender Award from the Canadian Lenders’ Association. Jeeves is a Y-combinator company providing financial services internationally, and with their recent success the company has been able to operate in 24 countries.

“I think the number one thing that all of us at Jeeves would agree on is that we intently listen to our clients, we understand that we try to understand the pain points and therefore try to match those pain points or client demands to work with our skill sets,” said William Lam, Jeeves General Manager of North America.

Lam oversees the market activities for the US and Canada. An expense management platform, which the company labels its product as, is essentially a platform used to track expenses. Compared to platforms like QuickBooks, Jeeves integrates with the software rather than competes against it.

“We focus on providing financial services, not accounting software, for international startups and fast-growing companies. We are excited to continue to enhance the Jeeves platform and integrate with more accounting software in the near future,” said Lam.

According to the Dictionary, the term Jeeves is defined as a butler or valet which resonates with the behavior that the company tries to model.

“We want to remind ourselves, that we need to be providing the type of services and products that our clients need, and nothing beats a happy client. And therefore, we came up with that name, Jeeves, and that’s the mode of writing that our CEO and founder has been living on a daily basis with the rest of his team,” said Lam.

During Covid many businesses suffered tremendously in Canada, but for Jeeves it helped the company to grow and expand.

“For us as a company, as a FinTech company, that aspires to provide financial services globally, I think the pandemic fueled growth, and we’re experiencing like 900% growth since our Series B,” he said.

For loans, Jeeves focuses on corporate card solutions which upon approval allows clients to get funds in 48 hours and can be paid back in 12 monthly payments.

“So specifically, we launched our growth capital products as of just last month in June. Growth capital is a non-diluted revenue-based financing that’s very suitable for a lot of SaaS businesses specifically, and the clients are able to get the loans,” said Lam.

Lam believes there is still a lot of work to be done to complete the vision of becoming a global finance company with hopes of launching in more countries, more products, and more news to share.

“We service a lot of the small businesses as far as like unicorns, or unicorn startups, we’re very proud of the achievement so far. But I think that this is just the beginning,” he said.