Canadian Small Business Lender Looks Doomed In Wake of COVID-19

June 29, 2020
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LendifiedAs well-known (1, 2) small business lenders in the United States continue to negotiate COVID-19 era workouts with their creditors, another in Canada appears to be falling off the cliff.

On Thursday, Lendified’s President & Director Kevin Clark tendered his resignation effective July 3rd. He follows other board members Edward Kelterborn and Benjy Katchen whose resignations went into effect on June 25th. Company CFO Norman Tan previously resigned on June 9th and no replacement has been named.

COVID-19’s arrival came at a difficult time for Lendified. Before COVID, the company had never turned a profit or reported positive cashflow in its entire history.

“Lendified is in default in respect of credit facilities with its secured lenders. Forbearance and standstill agreements are being discussed with these senior lenders, with none indicating to date that any enforcement action is expected although each is in a position to do so,” the company said. “However, no formal agreements in this regard have been concluded as of the date hereof.”

The company expressed that it would not be able to continue operations if it was not able to finalize a forbearance on its defaults AND simultaneously obtain an immediate infusion of capital to fund its operations.

Lendified’s board of directors is presently considering selling its assets or its entire business in order to raise revenue.

A wholly owned subsidiary of Lendified,, an automated loan underwriting platform, is poised to cease operations as a result of a cashflow shortfall. “[] requires cash infusions in the amount of approximately $100,000 per month in order to maintain operations,” Lendified reported. “Its cash reserves at this time are approximately $80,000. At this time, the Company is not in a position to continue to fund the Business and there can be no assurances that it will be able to do so in the future.”

The company went public on the Toronto Stock Exchange on May 26th via a reverse merger and has since experienced a 95% drop in its share price. The company’s market cap on Monday hovered around $700,000 USD.

Study Finds Vulnerable Canadians Ill-Equipped Against Coronavirus

May 4, 2020
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Canada FinanceLast week Loans Canada, a loans comparison platform, released a survey of over 900 financially vulnerable Canadians. These being defined as those Canadians who rely on low income, who have limited access to credit, and who have little to no savings available, the study found that many of the respondents were at risk of financial troubles from covid-19 due to their restricted means and ineligibility for government welfare programs.

30% of those surveyed reported that they are unable to access the Canadian Emergency Relief Benefit, a program that offers CAD$500 a week to those whose finances have been negatively affected by covid-19, due to the terms of the package. In order to qualify, one must earn less than CAD$1,000 over the four week period that the claim is for, leaving many who work part-time or who have had their hours cut unable to access the money.

As well as this, the survey recorded that many of these individuals are having difficulty accessing credit, as nearly 50% said that their bank has denied them funding. This coupled with the fact that 80% have experienced a loss of income due to the novel coronavirus, as well as only 12% of respondents having the government-recommended three months of living expenses saved up, paints a grim picture for the future finances of those vulnerable Canadians.

Beyond immediate finances, 73% of those surveyed believed that the pandemic would negatively affect their credit scores, 63% expect to miss paying at least one bill over the next six months, and 78% claim that they will struggle to finance their necessary expenses if the covid-19 situation continues through the summer.

Altogether, the study indicates a need for more financing amongst those likely to be hit hardest by the economic knock-on from covid-19. What remains to be determined however, is whether it will come in the form of governmental relief, credit from their banks, or funding from the non-bank lenders.

Canadian Small Businesses Face Tough Challenges As Government Passes Over Fintech

April 8, 2020
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Town of Canmore in the Canadian Rockies of Alberta, CanadaThis week the Canadian government announced its coronavirus economic relief plans. Among them are two initiatives that aim to assist small businesses: the Canada Emergency Response Benefit (CERB) and Canada Emergency Business Account (CEBA).

The first of these is a wage subsidy that will cover up to 75% of a company’s payroll. The hope being that this will postpone the overcrowding and clogging of the Canadian unemployment benefits system, known as employment insurance. However this program appears to appeal to only certain types of businesses. With subcontractors not qualifying as part of payroll, there is the fear that CERB could leave many small businesses and startups that rely on freelancers unprotected. As well as this, there is a requirement that the company’s most recent month of revenue be at least 30% less than what it was at the same time the previous year. This specification again acting as an obstacle to startups and high growth businesses.

The second is a loan program that is capped at CAN$40,000 with 0% interest for the first two and a half years, and then 5% annual interest beginning January 1, 2023. There will be an opportunity for the remainder of the loan to be forgiven if the business has repaid 75% by December 31, 2022.

According to Smarter Loans’ Vlad Sherbatov, the situation in Canada mirrors what is happening in the US with regards to PPP. “There are very little details available about how people are going to apply to get the funds,” the President and Co-Founder explained. “Nobody knows what’s actually happening and nobody knows when business owners can actually anticipate to receive any funding.”

BMO TorontoExpressing frustration that the Canadian government chose to ignore non-bank lenders in favor of allowing Canadian banks like BMO, RBC, and TD to distribute the funds, Sherbatov noted that it is the lenders who have the technology and processes to speedily disperse capital. “We did a survey that said almost 50% of business owners said they would shut down in less that four weeks without additional help … so it’s not that it’s just fine that there is help available, it’s how fast can [business owners] get the help, because every day that goes by makes the situation worse.”

Speaking to Kevin Clark, President of Lendified, he echoed Sherbatov’s concern.

“It’s all good that the government is making these decisions, but the capital has to move and the programs have to be in effect. So announcing these things is one thing, actually practicing them and executing them is another. There’s a time lag that could potentially put companies out of business and so, for us, it’s about trying to connect with a lot of these borrowers to say, ‘What can we do to help you with payments?’ But at the same time, we don’t want deferments for a long period of time because then our revenue base is challenged. So the fintech lenders all have significant challenges at hand, because defaults that move from within the normal course of between 5 and 10%, say now to between 15 and 25%, or even higher, are significant challenges for the operations of our business.”

Also a member of the Canadian Lenders Association, Clark is involved in the CLA covid-19 working group that was launched in March. Formed with the intention to assist the government’s approach to capital distribution, Clark was disappointed with the government’s decision to exclude non-bank lenders after the group reached out to both the Ministry of Finance and the Business Development Corporation of Canada. And with no government funding operation to assist, Clark, like many lenders in Canada, is turning toward his existing customers, hoping to keep their heads above water.

“What we’re all doing independently is trying to work with our customers to give them guidance on what is going on in Ottawa. And so most of us have made website adjustments to give some education to interested parties on what’s available in terms of subsidy. We’re trying to provide support to our customers through deferments and so forth, just as every lending institution is doing these days. It’s just that I think it’s harder for us and smaller firms that don’t have the margin and the wherewithal to withstand any sort of significant timeline in this situation. So it’s a little bit of week by week for us, trying to manage our own costs and so forth and keep our customer bases as happy and healthy as we can.”

Canadian Lenders Association Announces Creation of Covid-19 Working Group

March 20, 2020
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Canadian Lenders AssociationThe Canadian Lenders Association has announced its establishment of a covid-19 working group to support its members’ response against the coronavirus. The group will act as an advisory committee and resource for CLA members, while also serving as a lobbyist group to various government entities.

“We presently are in an unprecedented period in Canadian business,” CLA President Gary Schwartz said in a statement. “In the weeks and months ahead, CLA members will have an important role to play in supporting small business and in providing much needed credit to consumers across Canada. The goal of this initiative is to engage with and advocate on behalf of all stakeholders across the innovative lending ecosystem to help mitigate the disruption that covid-19 create in Canada.”

The working group will engage Canadian policy makers on key issues relating to small business lenders and small businesses. In a call, CLA Board Member and Merchant Growth Partner CEO David Gens said that “there’s a lot that governments can do to bridge businesses through this, so that once this virus is over, life resembles, as much as possible, what it looked like pre-virus … I don’t think we have seen enough yet in terms of the government response as it relates specifically to mom and pop small businesses … And I think that those businesses, those local storefronts really do make up the fabric of communities.”

Bank, Auto Lender, and BFS Capital Are New Additions to Canadian Lenders Association’s Board

February 11, 2020
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Canadian Lenders AssociationThe Canadian Lending Association has announced today that it has three newcomers to its board: BFS Capital’s CEO, Mark Ruddock; Cox Automotive Canada’s EVP, Jerome Dwight; and BMO’s Head of Specialty Finance and Loan Syndication in Canadian Commercial Banking, Lyla Kanji.

In a statement, Kanji said that she was “excited to join the CLA board and bring my expertise in specialty finance to help provide guidance to member companies.” While Ruddock commented that “After having focused for the past few years on financial technology innovation abroad, it’s thrilling to be back in Canada, and to be supporting Canadian businesses with access to the capital they need to power growth.”

Tal Schwartz, a spokesperson for the CLA, explained that he viewed new members joining the board as an indication of maturity for the Canadian market. With BFS being an established American alternative finance company and Cox offering auto loans, Schwartz told deBanked that these companies “show that commercial and consumer financing is expanding beyond what we typically think of as an SME or as a regular borrower.”

On BMO, Schwartz was delighted to have one of Canada’s largest banks join the board. “To have a major bank join the CLA really underlines how robust and mature the alternative finance industry has become,” Schwartz noted. “For us, having BMO join is really breaking down that old world understanding of alternative versus mainstream lending and proving that there’s really just a continuum of different lending solutions depending on the profile of the borrower.”

Study Claims Canadian Market Needs to Improve Financial Literacy

January 24, 2020
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Loans Canada StudyThis week Loans Canada, a lead generation company, released a study documenting the disparities between perceived financial literacy and actual financial well-being. Surveying 1,665 Canadians, the report asserts that those individuals who claim to have a firm grasp of their financial situation may in fact be out of touch.

This being highlighted by major misunderstandings about how to budget for the future as well as a lack of education regarding loan repayments. 72% of the respondents said that they did not save for emergencies, 43% did not track their spending, and 66% do not stick to a monthly budget. Such budgetary omissions outline the potential for a large portion of the Canadian market to be in trouble should unforeseen expenses arise, and the fact that two thirds of the market aren’t even drawing up budgets is a cause for concern.

Such factors are made worse by the community’s seeming misinterpretations of loan terms. With 40% of the survey stating that they didn’t know payday loans were one of the most expensive ways to borrow money, 30% not understanding that paying the minimum amount of a credit card charge still meant you had to pay interest, and just over half of those surveyed were not able to identify the factors which affect the cost of loans, there appears to be a problem surrounding financial literacy and education of individuals regarding loans.

As well as these issues, there is the case of stacking loans, with the study indicating that the practice is not fully understood by Canadians and that the two top reasons for taking on multiple loans are for emergency costs (25%) and making ends meet (43%). Interestingly, the respondents who claimed to have the most confidence in their capacity to make financially sound decisions are more likely to be individuals who stack loans, leading them, inevitably, to have similar or more debt than those surveyed who said they were not confident in their financial decision-making ability.

Altogether, the study paints the picture of Canada as a market in need of further education. While financial literacy isn’t in crisis, the report points towards vulnerable sectors, such as such as those individuals with poor knowledge of loans and interest rates, as well as budgeting, are groups that need to develop a better understanding.

Open Banking: Canada Might Not Be Able to Make Up for Lost Time

January 22, 2020
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open banking
Over the last two years, open banking has become a matter of public conversation in Canada. Most would agree there is overwhelming support for the implementation of an open banking regime. So why has nothing concrete happened yet?

2019 turned out to be an exciting, yet painfully underwhelming year for open banking in Canada. The news media finally caught on to the movement and started publishing stories on the rise of robo-advisor apps, or how small and medium-sized businesses would be impacted, and so forth. Experts and industry leaders pitched in with a massive volume of op-eds, most of which were in support of open banking, and with many deploring Canada’s slowness. Some came to our podcast to discuss their perspective (spoiler: customer-centricity is a very big theme.)

Another telling sign of the importance of open banking is the fact that at the federal level, both the legislative and executive arms of the government have become actively engaged in the public conversation. The Senate of Canada’s committee on Banking, Trade and Commerce produced a well-researched report — perhaps the most valuable contribution to the conversation. This report calls for swift action on the part of the federal government to advance a regulatory framework for open banking. In parallel, the Department of Finance’s appointed advisory committee on open banking held a consultation with key stakeholders and should publish its own report in the near future.

Even to a casual observer, there was an obvious sense that Canada is ready to embrace open banking.

But here’s the thing: despite all this work and evidence of widespread support, Canada didn’t move the needle on open banking in any concrete way.

Who’s leading?

The UK has already implemented a comprehensive open banking regime, and continental Europe is close behind. Dozens more countries are working toward their own versions. Among the various geographies moving in this direction, some are opting for a government-led approach, the UK probably being the best example. Others, like the US, tend to be more market-driven. In Canada, the main stakeholders are still largely hesitant about where to strike the balance between the two approaches — and the result is that so far, both have failed to provide the leadership that would allow open banking to move forward.

The Department of Finance’s advisory committee was tasked to study the “merits of open banking”. This line of inquiry feels very old, and for good reason: to question whether we should have open banking or not is a false debate, and a time-wasting rabbit hole. The real question Canada should be asking itself when it comes to open banking is, “what is the objective we want to achieve here?”

Let’s take a few steps back to realize just how important this question is.

The UK had a very clear vision for their open banking regime. The Competition and Markets Authority had assessed that the oligopolistic dynamics of the banking sector were putting consumers at a disadvantage. Thus, the UK set on their open banking journey with a very precise objective in mind: make it easier for consumers to switch providers. While some take great pride in criticizing the UK’s implementation — stating that its objective was either wrong, too narrow, or poorly executed — the fact remains that they are ahead of the pack. And the UK’s leadership in this area still persists, with the Financial Conduct Authority now studying the question of extending the current open banking regime into a holistic open finance regime.

Canada FinanceMeanwhile, in Canada, the government is trying to wrap its head around the big questions, such as the liability framework that should be put in place for an open banking regime to be viable. (In other words, in a system where financial services are decentralized, how do we go about making the consumer whole when something goes wrong?) However, without a decision on what end state we are looking to achieve with open banking, these conversations are doomed to keep looking exactly like they’re looking now: a bunch of market actors with conflicting interests pretending they know what’s best for consumers. Conversations happening in industry groups aren’t much more productive, with the “trench war” dynamics being the trend there as well.

The irony is that the technical aspects of open banking can be dealt with easily. From a technical standpoint, financial data-sharing APIs have proven their effectiveness, and coming up with a shared technical standard should not be too difficult. The real challenge is coming up with a framework everyone — incumbents and new entrants alike — can rally behind, something industry groups have largely been ineffective at.

Canada’s highly concentrated financial services sector is a stable one, but incumbents are not likely to open themselves up to disruption. This is the part where bold political leadership is required.

The clock is ticking

Data sharing is nevertheless picking up, as 4 million Canadians (and counting) have made fintech apps a part of their financial lives. Consumers and businesses who want the benefits of on-demand data sharing must rely on the current generation of financial aggregators, like Flinks. This system may work as a de facto connectivity layer, but the lack of standards results in a clumsy patchwork of bilateral deals between aggregators and banks. It just isn’t a viable way to achieve an open banking regime that levels the playing field when it comes to data portability.

In its report, the Senate’s Committee on Banking, Trade and Commerce states that Canada “risks falling behind” if it fails to implement open banking, and that “without swift action, Canada may become an importer of financial technology rather than an exporter.” It is true that if we keep delaying open banking, our slowness will prove to be a very stingy and lasting price to pay for the Canadian society; this is why we need bold action now. We can’t afford the comfort of waiting until we’ve figured out the 100% perfect solution.

There’s nothing like a real-world example: 2020 opened with a seismic shift when financial giant Visa acquired Plaid, one of the largest US financial aggregators, for over five billion USD. This is hinting at a new phase where markets will consolidate around a few large players; Canada can either ride the tide or get towed under.

It’s time to be bold

In the end, what needs to happen for Canada to move forward with open banking?

Our financial services sector can be compared to those of the UK and Australia, where a few powerful banks control a very large portion of the market. In those two countries, open banking was designed to stimulate competition, and government action was necessary to get things moving.

Right now, the question politicians ought to ask shouldn’t be if — or even how — but why. A why will pave the way and provide a natural direction to sort out the how. In 2019, discussions around open banking lacked this fundamental feature: political leadership centered on a bold, ambitious, consumer-centric mission statement. A why.

So here’s one for 2020: open banking will increase consumers’ choice when it comes to financial services. That would be a good start — and while good is not perfect, it still beats nothing by a landslide.

Report Finds Canadian Alternative Lending Market Making Gains

January 8, 2020
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Canada StateA study released by Smarter Loans this week indicates that the Canadian alternative finance industry has grown since last year’s iteration of the report. Titled ‘The State of Alternative Lending in Canada 2019,’ the report highlights how the market has developed in regard to the age and gender of its customers, the level of trust in online lenders compared to financial institutions, as well as the levels of satisfaction felt by Canadians dealing with alternative funders.


The first of these, regarding aspects of the customers’ identities, demonstrates that generational gaps are as wide as they’ve ever been amongst customers. Each age bracket questioned by the study showed differing priorities when seeking a loan. Generation Z, fitting in between those aged 18-24, paid attention to funders’ track records and reputation when looking for funding; whereas millennials (25-34) sought speedier applications and approvals. Generation X (45-54) however appeared more money-minded, with the priority being placed on terms and interest rates; and Baby Boomers (55-64) demonstrated a desire for having someone to talk to, putting customer service at the top of their list.

Vlad Sherbatov, Smarter Loans’ President and Co-founder, told deBanked that these differences can be summed up as the values each generation has developed through experience. Explaining that Gen Z is “all about the personal brand,” Sherbatov said, “People that are younger now really associate with the company they work for, they ask, ‘Am I aligned with or would I be embarrassed supporting this brand?’” While the Millennials’ response indicates a greater desire for results, “as the age progress the intent increases.” Gen X is “more educated and experienced people,” who appear to place the greatest importance on money; and Baby Boomers, the least digitally fluent group, just want the online applications to go smoothly and to have ready access to assistance.

As well as age, gender appeared to divide customers, with women more likely to spend more time researching loan providers than men; and more men saying that they were interested in approaching a traditional financial institution for a loan in the future, with half of them being of this opinion compared to just 39% of women. As well as this, it was found that women are more likely to find the application easier, but are less likely to be approved than men.

between provinces

Regarding trust and transparency, roughly 70% of Canadians believe alternative finance to be a safe way of getting a loan. With 80% of customers feeling that they are informed enough of the industry’s practices and 69% saying that they believe online loan providers are transparent about their fees, interest rates, terms, and conditions.


According to Sherbatov, “this is a trend that’s been moving in a positive direction” over the years. With the 2018 version of this study emphasizing the need to build trust with Canadians to reduce that 30% which is holding out on, Sherbatov maintains the need to do more. “The more transparency from lenders, the more trustworthy it’ll be, the further the industry will advance.”

Customers appear to be mostly satisfied with the service they received from alternative lenders in 2019, with the average rating taken from the 2,415 respondents being 3.4 out of 5. This being a 0.2 bump up from last year’s score. Interestingly, one of the sectors reporting the highest levels of satisfaction were those customers who received payday loans, noting that they appreciated the speed with which they were approved.

Altogether, the report paints a picture of the Canadian scene as a market still in flux, where growth is happening, albeit slight, and both the customers and the lenders still have much to learn from each other.

Merchant Growth Partners with goeasy to Provide Funding via Physical Branches

December 11, 2019
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Merchant Growth goeasyThis month Merchant Growth, the Vancouver-based alternative finance company, announced its partnership with goeasy Ltd. that will see Merchant Growth’s services being offered in goeasy branches throughout Canada. Beginning with British Columbia, Alberta, and Saskatchewan in 2019, Merchant Growth aims to have expanded to the remaining provinces in the first quarter of 2020.

Under the partnership, goeasy will receive compensation from Merchant Growth for all loans made through them while Merchant Growth will provide the capital.

“goeasy is a unique Canadian success and they’ve done that by being disciplined managers, by putting their customers first, and by building a great reputation for themselves in the industry,” said David Gens, Merchant Growth’s President and CEO. “And what we see in them is an ideal partner in that they have the market reach in terms of brand recognition and locations around the country.”

It is the latter of these factors that make the deal stand out. Given the industry’s standard of digital applications, goeasy and Merchant Growth’s return to brick and mortar branches that offer live human managers, clerks, and even physical paper, marks a turn back towards more historical methods of doing business.

Gens commented on this, stating that “there’s something to be said for face-to-face interactions and for that reason I don’t think you’re ever going to go down to having no bank branches … Having a physical location where you can chat with people about your financial needs is something that will always exist as far as I can see.”

The Current State of SME Lending in Canada

December 1, 2019
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Canada FinanceAccording to the latest statistics, there were 1.18 million employer businesses in Canada, with the majority of them located in the provinces of Ontario and Quebec.

  • 1.15 million (97.9%) represented small businesses
  • 21.926 (1.9%) referred to medium-sized ventures
  • Only 2.939 (0.2%) accounted for large corporations

Small and medium companies are blooming in Canada: they represent 99.8% of all businesses, and they are the heart of the local economy. However, these businesses are facing extreme challenges when it comes to raising capital – a crucial element of SME growth.

The Canadian banking sphere, dominated by five large banks, often overlooks these businesses. Banks in Canada typically require 32 articles of information when applying for a loan and still 78% of applications from SMEs are rejected. It is especially stressful for startups: you can’t get a loan unless you have customers, but you can’t start your business and get customers without a loan. Cash flow, on the whole, is a complex concept that may be confusing for small business owners, and this kind of financial exclusion only makes it worse. The problem is global, but this Catch-22 has given the green light to alternative lenders worldwide.


One of the alternative funding options for SMEs to bypass the banks and find the right level of capital that they need is called a merchant cash advance (MCA). MCAs aren’t loans. Instead, they represent the sale of a business’s future revenues in exchange for quick cash — the majority of applications are approved within 2 days. This way, a funder provides a lump sum payment with a predetermined percentage (the factor rate) of a merchant’s future credit or debit card sales — cash and check sales typically don’t qualify to be counted. The process goes on until the contractual terms are satisfied. The MCA industry is growing on Canadian soil, but since it is a relatively new domain, the sector remains heavily influenced by American providers, especially when it comes to business models and pricing. But domestic providers don’t see it as a threat. Bruce Marshall, VP of British Columbia-based Company Capital told deBanked in 2016 that “We are happy that some of the bigger US players are coming up here and they are spending millions of dollars on advertising. These companies raise awareness of the industry to a higher level and with us being a smaller company, we can ride on their coattails.”

The question of raising awareness of new technology is vital. In comparison to American SME owners, their Canadian colleagues are slower to adopt technology — for instance, only 27% say they currently use technology to analyze customer data. Another study by BDC claims that only 19% of Canadian businesses are digitally advanced.

On the other side, those established companies find the Canadian alternative lending market to be “a very manageable extension of the US market.” However, it’s a smaller market, and Canada’s geographical position (the majority of businesses are located in four main provinces out of thirteen) and regional differences play their part as well. For instance, because of the restrictions that require businesses to advertise and produce marketing materials in French, the majority of alternative lenders from the US don’t operate in Quebec.


All in all, MCAs are slowly becoming a financing option for Canadian SMEs looking for quick cash. That “slowness” comes from a lack of understanding about how exactly merchant cash advances work. Some alternative funders take advantage of their non-bank status to neglect regulations that require clarity resulting in somewhat unethical lending practices. Because of this, a certain number of business owners still hesitate to take a chance on a merchant cash advance program.

MCAs in Canada are generally available to businesses that have a steady volume of credit card sales, such as retail stores or restaurants. The amount of personal and business information required when applying for an MCA is much lower in comparison to a regular bank loan application: the documentation generally includes proof of identity, bank statements, and business tax returns. Merchant cash advance rates and costs differ from provider to provider. As MCAs aren’t loans, there are no fixed amounts for repayment installments and no fixed terms either. Typically, the percentage of credit card sales taken to enable the transaction ranges from 5 to 10%. Some companies in Canada charge premiums on their cash advances (which can be as high as 30% or even more.)


The main challenge for Canadian MCA providers is the absence of reliable data necessary for making underwriting decisions. As previously mentioned, only a small group of large financial institutions dominate the market, so the data is available solely to a handful of businesses. The information obtained from credit bureaus doesn’t help either: in most cases, it isn’t complete for making a wise credit decision. “The availability and access to government and financial data are scarce in Canada compared to other markets,” said Jeff Mitelman, the former CEO of Thinking Capital in an interview with deBanked in a past interview. “Most of the data relationships that fintech companies rely on, need to be developed on a one-to-one basis and is often proprietary information.”

When it comes to the process of underwriting, the availability of data presented in the proper format is a crucial factor. It provides the full picture and saves an enormous amount of time for risk officers. “We pay a lot of attention to our underwriting and decision-making process because if we make a mistake, we can lose a lot of money,” Andrew D’Souza, the CEO of Clearbanc, told TechCrunch.

At the moment, the financial data available to Canadian alternative lenders is meager and needs improvement. Another issue is the legislation that varies with each province. Many alternative lenders find the Canadian rules and regulations that govern the industry rather unclear. However, those challenges are associated with a growing market and emerging ecosystem. One way or another, the business loan landscape has changed for good, and alternative financing methods have captured much attention, with giants like PayPal stepping in the game.


As the industry is new, and has lots of challenges, the banking sphere and fintechs are turning to partnerships accelerating online lending to small business members. It makes perfect sense to MCA providers to license their automated platforms, banks, and credit unions. Traditional players are familiar with regulations and have data for fine-tuned underwriting, while fintech providers bring innovative technology and customer experience. “We saw that Canada is ripe for technology but the differences in regulation among other things made us go the partner route,” said Peter Steger, the head of business development at Kabbage, to deBanked – a perfect illustration of the growing partnership trend. These mutual interests create a lot of business opportunities, and that’s a good sign for all parties involved.

When small business owners need financing, timing is essential. Small and medium businesses are vital to the Canadian economy, so for them, the proper financial support means fast and convenient access to credit. In the new fintech-driven reality, applications should be completed within thirty minutes, decisions made within hours, and funds deposited in the applicant’s bank account within days. Canadian small businesses contribute around 30% of the total GDP, so the need for simple finance is acute. The technology has already made small business lending more accessible, and over time, financing alternatives such as MCA will become mainstream.

Fast and Furious Funders – At The Canadian Lenders Association’s Venture Debt Summit

November 30, 2019
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Fast and Furious Funders was the name of a panel at the Venture Debt Summit hosted by the Canadian Lenders Association on October 23, 2019. Panelists included:

  • Karanjit Bhugra, Managing Director, Deloitte Corporate Finance
  • Jyotin Handa, Director of Finance, Espresso Capital
  • Tanay Delima, Co-Founder, Clearbanc
  • Keren Moynihan, Co-Founder, Boss Insights

You can watch the video of the panel below:

Canadian Lenders Summit Recap

November 23, 2019
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canadian lenders summit 2019The Canadian Lenders Association’s largest annual event brought together hundreds of executives from the fintech and lending industries. It was hosted at MaRS, a dedicated launchpad for startups in Downtown Toronto that occupies more than 1.5 million square feet and is home to more than 120 tenants, many of which are global tech companies.

After OnDeck Canada CEO Neil Wechsler was introduced as the new chairman of the association, the day kicked off with a presentation by Craig Alexander, the Chief Economist of Deloitte Canada. Alexander explained that after some major warning signs sounded off late last year and early this year, Canadian growth and positive economic indicators have returned. He opined that politics in Canada and the United States will play a strong role in the economic outcomes of both countries going forward.

Panels on a variety of topics dominated the rest of the day with an interlude keynote from author Alex Tapscott who spoke about the financial services revolution.

The sessions concluded with an award ceremony focused around the Top 25 Company Leaders in Lending and the Top 25 Executive Leaders in Lending. The Canadian Lenders Association will make videos of the sessions available online. deBanked was in attendance.

Top Canadian Companies of the year

2019 Top 25 Executive Leaders in Lending – Canadian Lenders Association – Presented By BMO

November 11, 2019
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Leading Lenders CLAThe Canadian Lenders Assocation (CLA) received 124 nominations for these awards from leaders in lending across the country. The CLA’s goal is to support access to credit in the Canadian marketplace and champion the companies and entrepreneurs who are leading innovations in this industry.

The Top 25 finalists in this report represent various innovations in the borrower’s journey from innovations in artificial intelligence powered credit modelling to breakthroughs in consumer identity management using blockchain technologies. These finalists also represent solutions for a wide spectrum of borrower maturity and needs, ranging from consumer credit rebuilding all the way to senior debt placements for global technology ventures.

See The Leading Companies Report Here

See The Leading Executives Report Here

Mark Cashin

CEO of myBrokerBee | Ontario

After a career in commercial finance and being CEO of Transpor, Mark Co-founded myBrokerBee a mortgage broker platform that provides transparency to private lenders and their clients.

Avinash Chidambaram

CEO of Ario Platform | Ontario

Through his experience as Product lead at Interac and Blackberry, Avinash has helped bring together an accomplished and talented group of experts in Data Science, Machine Learning, Security, Software Development to successfully develop this banking services software platform Ario.

Evan Chrapko

CEO of Trust Science | Alberta

Evan is the founder and CEO of Trust Science, a leader in organizing alternative credit data. As a saas founder and CEO, Evan has done over 500mm in startup exits.

Kevin Clark

President of Lendified | Ontario

Kevin is a recognized leader in the financial services industry with over 30 years of experience. Kevin has helped create the voice of Canada’s SME lending ecosystem through his leadership of Lendified and the CLA.

Jerome Dwight

VP of Cox Automotive | Ontario

Jerome established Nextgear Capital in Canada to become the largest specialty finance company in the automotive sector. Jerome is a Globe & Mail 40 under 40 winner and previously lead RBC’s international wealth management, private banking and asset servicing business.

Saul Fine

CEO of Innovative Assessmer | Israel

Saul is a licensed organizational psychologist and psychometrician, and a former lecturer in psychology at the University of Haifa. Saul is a global leader in the use of psychometric data for credit scoring and financial inclusion.

David Gens

CEO of Merchant Growth | BC

David is the Founder and CEO of Merchant Growth, which grew from its humble beginnings in his apartment to offices in both Toronto and Vancouver. David now leads one of Canada’s largest online small business finance companies.

Bryan Jaskolka

COO of CMI | Ontario

Nominated for the 2018 Mortgage Broker of the Year, Bryan Jaskolka is an expert in Canadian mortgage financing with a particular focus on the alternative lending space and mortgage investing.

Peter Kalen

CEO of Flexiti | Ontario

Peter is a leader in Canada’s retail financing market. Before founding Flexiti, Peter was in senior leadership positions at Citi, PC Financial, and Sears Canada. Flexiti was recently named #7 on the Deloitte Fast50.

Yves-Gabriel Leboeuf

CEO of Flinks | Quebec

Yves-Gabriel Leboeuf is the co-founder and CEO of Flinks. Under his leadership, Flinks has become a Canadian leader in banking data enablement.

Derek Manuge

CEO of Corl | Ontario

Derek, also known as the “the quant from Canada” is the founder of the data-driven venture firm, Corl. Corl is one of Canada’s leaders in the use revenue-share financing models.

Keren Moynihan

CEO of Boss Insights | Ontario

Keren Moynihan is co-founder and CEO of Boss Insights, a company that uses big data and AI to accelerate lending from months to minutes. With a Joint JD/MBA, Keren has a diverse background as a commercial banker, wealth manager and former founder of an impact startup.

Jason Mullins

CEO of Goeasy | Ontario

Jason is President and CEO of goeasy, a publicly listed consumer lender. Jason has lead the company to become one of the largest and most innovative lenders in the country.

Paul Pitcher

CEO of SharpShooter Funding | Ontario

After founding First Down Funding, an alternative lending firm for SMEs in Baltimore, Paul expanded his business to Canada through the subsidiary Sharpshooter Funding.

Brendan Playford & Cate Rung

Co-Founders of Pngme | USA

Cate, ex-Uber and Brendan, a blockchain and agro-finance entrepreneur are the co-founders of Pngme, an alternative lending platform for financial institutions in emerging markets who serve Micro, Small, and Medium-sized Enterprises.

Wayne Pommen

CEO of Paybright | Ontario

Wayne is the President and CEO of PayBright. Wayne is also a director of IOU Financial Inc and of HBC. Previously, Wayne was a Principal at TorQuest Partners, one of Canada’s leading private equity firms, and a management consultant with Bain & Company in the UK, the US, and Canada.

Adam Reeds

CEO of Ledn | Ontario

Adam is a pioneer and thought leader in the digital asset backed lending space. Ledn is focused on building innovative financial products in the emerging digital asset space, with a focused mission to help people save more in bitcoin.

Adam Rice

CEO of LoanConnect | Ontario

Adam has played a pivotal role in building one of the largest online markets in Canada for unsecured loans.

Mark Ruddock

CEO of BFS Capital | Ontario

Mark is an experienced international CEO with two successful exits and over 20 years of experience at the helm of VC backed technology and fintech startups. In 2019 Mark announced BFS Capital’s expansion to Canada with a new 50 engineer data science hub in the heart of Toronto.

Vlad Sherbatov

President of Smarter Loans | Ontario

Vlad Co-founded Smarter Loans in 2016 with the goal of helping Canadians make smarter financial decisions. Since then, Vlad has grown the platform into one of the go-to resources for Canadian borrowers.

Steven Uster

CEO of FundThrough | Ontario

Steven is the Co-Founder & CEO of FundThrough, an invoice funding service that helps business owners eliminate “the wait” associated with payment terms by giving them the power and flexibility to get their invoices paid when they want, with one click, and in as little as 24 hours.

Dmitry Voronenko

CEO of Turnkey Lender| Singapore

Dmitry, CEO and Co-founder of TurnKey Lender, holds a PhD in Artificial Intelligence. Dmitry was recently named SFA’s Fintech Leader of the year.

Neil Wechsler

CEO of Ondeck Canada | Quebec

Neil briefly practiced law before becoming President and CEO of Optimal Group Inc. where he grew the company from a start-up to a leading NASDAQ-listed self-checkout and payments company. Neil later co-founded Evolocity, which in 2019 became OnDeck Canada.

Michael Wendland

CEO of Refresh | BC

Michael has led Refresh Financial’s rapid growth since its founding in 2013, including a recent ranking of number 40 on Deloitte’s Fast 500.

Canadian Lender’s Association Awards Leading Executives and Companies

November 11, 2019
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cla leadersToday the CLA announced the winners for its 2019 Leaders in Lending Awards. Highlighting the efforts of exceptional players within the fintech and alternative finance fields, the awards seek to “celebrate the industry and celebrate all the cool fintech things happening in Canada,” according to the CLA’s Strategic Partnerships Director Tal Schwartz.

Now in its second year, the Leaders in Lending Awards are split into two categories, with one focusing on the efforts of companies in the industry and the other on individual executives. 2019 will be the first year that the latter of these categories is incorporated. The awards will be imparted to their new owners at the Canadian Lenders Summit later this month, where a special prize will also be given to one winner from each category.

Among the winners in the first category are Borrowell, IOU Financial, and Michele Romanow’s Clearbanc. While making an appearance in the second category are David Gens of Merchant Growth, Paul Pitcher from SharpShooter Funding, Smarter Loans’ Vlad Sherbatov, and Kevin Clark from Lendified.

The criteria for the awards were based upon three tenets, these being a commitment to the “use of advanced fintech solutions” to solve challenges in the lending process, the “implementation of new or innovating lending strategies or business models,” and evidence of successful outcomes following the implementation of new fintech or a new business model.

When asked about possible expansions to the awards in the future, Schwartz was receptive to the idea of covering more ground with the prizes, saying “I definitely think we’ll expand the categories.” Mentioning that there’s a host of niches that are worth highlighting, such as blockchain, psychographic credit scoring, and credit rebuilding, which deserve their day in the sun.

“We have a mandate as a trade group to celebrate the industry,” emphasized Schwartz. And that celebration will be taking place on November 20th at the Canadian Lenders Summit in Toronto.

See The Leading Companies Report Here

See The Leading Executives Report Here

2019 Top 25 Company Leaders in Lending – Canadian Lenders Association – Presented By BMO

November 11, 2019
Article by:

Canadian Lenders Assocation CoverThe Canadian Lenders Assocation (CLA) received 124 nominations for these awards from leaders in lending across the country. The CLA’s goal is to support access to credit in the Canadian marketplace and champion the companies and entrepreneurs who are leading innovations in this industry.

The Top 25 finalists in this report represent various innovations in the borrower’s journey from innovations in artificial intelligence powered credit modelling to breakthroughs in consumer identity management using blockchain technologies. These finalists also represent solutions for a wide spectrum of borrower maturity and needs, ranging from consumer credit rebuilding all the way to senior debt placements for global technology ventures.

See The Leading Companies Report Here

See The Leading Executives Report Here


The 75 year old firm is the only Canadian bank devoted exclusively to supporting entrepreneurs.


Borrowell helps Canadians make great decisions about credit. They were the first company in Canada to offer credit scores for free, without applying for credit, and currently has over 800,000 users. Eva Wong and Andrew Graham were the joint recipients our the CLA’s awards in 2018.


Clearbanc offers a new approach to capital access for entrepreneurs that uses AI to determine funding terms with a focus on unit economics and repayment through revenue share as a way to get founders access to the capital they need to fuel their growth.


CreditSnap is a best in class pre-qualification and cross selling engine to deliver highly relevant pre-qualified loan offers to CreditSnap banks and CUs.

Dealnet Capital

Dealnet Capital services the home and retail sectors providing end-to-end financing plus innovative technology and communication solutions.

Espresso Capital

Since 2009, Espresso Capital has provided over 230 early and growth stage technology companies with founder friendly capital. Espresso offers lines of credit and term loans to enable entrepreneurs to grow their businesses without dilution, board seats, or personal guarantees.


Financeit is a market leading point-of-sale consumer financing provider, servicing the home improvement, vehicle and retail industries.

First West Capital

First West Capital is a leader in Canadian mid-market business funding. First West Capital helps ventures acquire and transition through innovative junior capital financing.

Home Trust

Home Trust Company is one of Canada’s leading trust companies. Home Trust offers Canadians a wide range of financial product and service alternatives, including mortgages, Visa cards, deposits and retail credit services.


Inverite is the first Canadian designed, developed and focused real-time bank verification service. With coverage for over 240 Canadian FIs.

IOU Financial

Based in Montreal, IOU Financial provides small businesses throughout the U.S. and Canada access to the capital they need to seize growth opportunities quickly.

Lending Loop

Lending Loop is Canada’s first and only regulated peer-to-peer lending marketplace focused on small business.

Magical Credit

Magical Credit has been helping Canadians consumers get approved for quick and simple short term personal loans since 2014. They offer personal loans up to $10,000 regardless of the borrowers past financial issues or credit.


Manzil is the market leader in the manufacturing and distribution of Islamic Financial products for Canadians who wish to balance material pursuits with their spiritual obligations.

Marble Financial

Marble Financial uses smart technology and socially responsible lending practices to help Canadians rebuild credit once their past debt has been settled by a consumer proposal.

Owl is a customer insight engine that helps financial institutions make better decisions. By connecting to tens of thousands of trusted data sources, Owl is able to instantly aggregate and synthesize millions of data points to learn more about customers and entities.


Paays is a Canadian eCommerce financing solution for a new generation of digital consumers seeking “point of inspiration” financing.

PayPal Canada

PayPal Canada recently announced a new SMB loan offering in Canada – a quick application process that can approve an applicant in minutes and transfer funds in one to two business days.


Named by CB Insights to the 2018 Fintech 250, a list of the world’s top fintech startups, Progressa is Canada’s fastest growing financial technology lender focused on changing the way pay cheque to pay cheque Canadians access and build credit.

Shopify Capital

In its effort to become a one-stop e-commerce shop, Shopify Capital allows Shopify business owners to secure funding through revenue sharing on daily sales.

Silicon Valley Bank

For more than 35 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides a full range of financial services and expertise to companies of all sizes in innovation centers around the world.

Spring Financial

Spring Financial is a subsidiary of Canada Drives, one of the leading brands for auto financing in Canada. Spring provides accessible solutions for Canadians to establish a positive payment history.

Thinking Capital

Thinking Capital is a leader in the Canadian Online Lending space, leveraging technology to be at the forefront of the FinTech industry. Since 2006, they have helped more than 14,000 small-to-medium sized Canadian businesses reach their full potential


Uplift’s mission is to make travel more accessible, affordable and rewarding by enabling travel providers such as JetBlue, American Airlines, and United to offer flexible payments to their customers.


Venbridge is a leading Canadian venture debt firm. Venbridge provides SR&ED, grant and digital media financing and consulting.

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How Business Financing Has Changed

October 22, 2019
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Canadian DollarsThe first thing small business owners think about when deciding to take on funding to grow their business is the ten-year, 3% bank loan that was the standard ten to twenty years ago. The application and approval process was much slower, and if a borrower didn’t fit the mold that mainstream lenders were looking for, approval was difficult. Today, the business loan landscape has changed, and alternative financing methods have captured much of the market. Small business owners who can’t get approved by the banks have access to the funding they need to grow and expand their businesses.

The technology that these alternative lenders use has made small business lending more accessible. Applications are online, underwriting techniques are fine-tuned and often times quicker, and borrowers get personalized offers and service.

More money is going out and more business owners are getting approved.

Changes in loan accessibility

Increased loan accessibility has resulted in more loans, but what does this mean for small business owners? And what are the risks to small business funders?

While alternative lending has opened up more doors for small business owners, as both the industry as a whole and individual lenders move faster, so increases the risk of people taking advantage of the system. Twenty years ago, fewer lenders meant that business owners had fewer options, but on the flip side, it meant that lenders didn’t need to worry as much about dishonest borrowing practices.

Increased competition pushes more lenders to approve more loans faster than ever. After all, if one lender won’t, another may, and the competition is just a Google search away. Unfortunately, this has also resulted in more opportunities for both borrowers and salespeople to take advantage of the system, and one of the largest risks to small business funders and small business owners alike is loan stacking.

What is loan stacking?

Loan stacking is used to refer to borrowers who take out multiple loans from multiple sources within a short window of time without thinking of their business’s long term health, due to the speed and efficiency that the funding occurs in, most business owners do not think twice as it becomes easy to obtain funding. Typically this situation occurs when a borrower can’t get approved for the total amount of money they need, or when a borrower is promised better rates at a future date by accepting the first offer from an overeager salesperson. The biggest red flag for all small business owners is when a promise is made without it being put in writing. If the funder or lender is not willing to put future promises on paper then steer clear of any future funding dealings.

Who is the culprit?

While some small business owners that cannot qualify for the full amount of cash they need may instead obtain multiple smaller loans to satisfy their requirements, others have more malicious intentions. Some borrowers take on funding for their business intending to use those funds for non-business related expenses. Whether it’s to go on vacation, pay down debt, or make a large purchase, this type of loan stacker may not fully understand the consequences of taking on more debt than their business can comfortably handle. During the funding verification calls, prior to funding, any mention of outside use for the funding can have a lasting effect on future funding relations.

An owner whose business is about to go under is another common offender. These borrowers make the decision to accept multiple funded deals, knowing that their business is at the end of its life, take the cash, close their bank accounts, and often declare bankruptcy, leaving the lender with no way to collect.

Finally, a small business owner may choose to lie to the lender about the purpose of the loan, thus convincing the lender to approve them for additional funding. A business loan to help with a larger long term project, like opening a new location that will bring increase revenue. But, when a borrower lies to a lender to get additional funding and thereby stacks loans on top of loans, this can become an issue.

While the borrower is often the offender, this isn’t always the case. Some brokers and salespeople prey on potential borrowers by employing aggressive and unethical sales tactics. “Baiting the borrower with a promise of a better rate down the line, but more importantly offering terms of approval that are unrealistic is a recipe for disaster. It is perfectly fine for any funder or lender to customize approvals to gain long term business relations, but to purposely or viciously offer unrealistic terms in the future, creates a need for a “Small Business Funding Code of Ethics”. Long term funding relationships are created with trust, transparency, and willingness to meet halfway. With the right Code of Ethics in place, the entire Small Business Funding industry can shine above all other financing,” explains Paul Pitcher, managing Partner at First Down Funding and SharpShooter Funding. Often these borrowers have just taken on a loan, probably for less than they had originally wanted, and the prospect of additional funds is quite appealing. The problem is that this often leaves the borrower overstretched, putting all parties at risk.

Understand the risks & signs

Business owners who stack loans are not only affecting the lenders they obtain funding from but are putting both their personal and business finances at risk. “Every business owner must analyze their 30, 60, and 90-day cash flow in order to better serve the purpose and total cost of capital for all rounds of funding” explains Pitcher.

Chances are if a lender doesn’t approve a business owner for the full amount they wanted, it’s because their finances can’t handle more and the lender did not want to put the business in a difficult position. After all, it is in the best interest of the lender for the small business to succeed.

In many cases, a business owner could be personally liable for their debt. However, aggressive brokers looking to quickly cash in on loans commissions put lenders at risk as well. Therefore, funders need to be wary of both deceptive business owners and lenders.


When it comes to prevention, most lenders benefit from a three-pronged approach; a strong underwriting system, helpful consumer education, and open communication with the competition. “The most important part of funding deals day-to-day is the strength and volume of business and personal references. When the inner circle of the business owner vouches for them positively, 99% of the time, the deal can fund cleanly and perform,” explains Pitcher.

A strong underwriting system and a solid set of procedures can help lenders make sure they don’t unknowingly enter into a cycle of loan stacking. Experience plays an important role, but if you have a strong understanding of what you’re looking for and perform the appropriate amount of due diligence, you should be able to prevent the majority of loan stacking. Nevertheless, most small business funders already have such systems in place and yet loan stacking is continuously growing problem.

An informed applicant becomes a great borrower. Dealing with a frustrated business owner who can’t get approved for the full amount they want, is never fun. But, educating them about why they can only qualify for a certain amount is a key component in preventing loan stacking and ensuring a borrower isn’t taken advantage of. “The first impression a funder gets from an owner, a hand-signed and dated application, and the organizational skills needed to send over prepared financials and bank statements, can say a whole lot about the business owner’s interests, intentions, and overall health. The more rushed we feel, the less likely we will want to work with that said business,” explains Pitcher.

Finally, chatting with your competition might not seem like a great idea, but maintaining open lines of communication with those in your industry can help spot loan stacking schemes before they get out of hand. Trade shows and other industry events are a good place to network and meet other industry stakeholders.


Running a small business takes time, persistence, passion, and money. This is why small business owners need funders to be on their side of the court.

Educating and providing borrowers with useful information at the right time can help reduce the risk of loan stacking and helps to maintain healthy accounts.

BFS Capital Launches Canadian Tech Hub

October 16, 2019
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Toronto CanadaSmall business lender BFS Capital is making an expansion push with the creation of a new data science and engineering hub in Toronto. BFS, which serves customers in a trifecta of jurisdictions that in addition to Canada includes the U.S. and the UK, has undergone a technological transformation that includes building out a tech team for the next generation of the firm’s products.

BFS Capital CEO Mark Ruddock took some time to discuss the Toronto expansion with deBanked.

“We have an ambitious roadmap and plan to innovate quickly,” said Ruddock, “As a result, we had to ask ourselves, where could we best do this? We looked at cities across North America with strong tech and data science talent, and which were millennial friendly. We were frankly quite surprised by Toronto. Something fundamental is happening in Toronto – it’s fast becoming a leading city for data science, AI, and mobile app development in North America.”

Indeed, deBanked hosted its inaugural Canadian event in Toronto this past July after keeping an eye on its burgeoning fintech scene there for years.

“We are seeing a fundamental transformation happening in our customer base, from a less digitally savvy generation of entrepreneurs willing to accept the traditional financial products to a demanding, digital first generation, seeking new financial solutions,” said Ruddock, pointing to a two-pronged approach of real-time algorithmic decisioning and a mobile-first user design. “The intersection of those two things is the tipping point for small business financial services for the next while,” he added.

BFS Capital is finding that the younger generation is well equipped with technological skillsets, noted Ruddock, pointing to the Universty of Toronto and University of Waterloo as two of the best schools in North America for tech talent.

Merchant Advance Capital Rebrands to Merchant Growth

July 3, 2019
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Merchant Growth websiteMerchant Advance Capital, which trumpets itself as Canada’s fastest and most transparent small business financier, is rebranding as Merchant Growth.

The company has offices in Vancouver, BC and Toronto, ON and was founded in 2009.

“I founded our company out of my apartment 10 years ago,” David Gens is quoted as saying in a company announcement. Gens is the company’s president & CEO. “Back then our mission was simply to provide credit to small businesses, and we did that by providing one product, called a ‘merchant advance’. Today, we offer a comprehensive suite of financing solutions delivered with unparalleled convenience. In doing so, our mission has expanded to allowing business owners to achieve unconstrained growth, while reducing the administrative stress of running a business. As we’ve transformed our focus from one credit product to this far-reaching mission, we felt the need for our name to reflect this. We are Merchant Growth.”

Gens has been an oft-quoted source in deBanked over the years. His company closed on a $30 million debt facility last year with Comvest Credit Partners.

Gens is also speaking at deBanked CONNECT Toronto on July 25, 2019. You can register to attend at