Canada
Smarter Loans Expands into Banking, Insurance, Investing, Money Transfers and Debt Relief Solutions
September 22, 2020
Smarter Loans – Canada’s largest loan comparison website – is excited to announce their expansion into new financial categories that include: Everyday Banking, Insurance, Investing, Money Transfers, and Debt Relief.
Canadians nationwide use Smarter Loans to find the most innovative financial products and services in the country, compare their options, and make smarter financial decisions. Launched in 2016, Smarter Loans today works with over 80 of the top financial brands in Canada, including banks, credit unions, alternative lenders, financial services and innovative FinTech companies that are leading the digital transformation in the Canadian financial sector.
The expansion is another step by Smarter Loans in helping Canadians access more financial products online.
We believe that Smarter Loans is at the forefront in the evolution of how people want and expect to shop for financial products. There is a big shift towards buying online and companies that are setup to transact and sell their services on the Internet are winning. We work hard to seek out top financial brands and are really excited that Smarter Loans visitors can now find even financial solutions on our site. (Rafael)
It’s a great experience when a person can send money overseas, get life insurance, and open a savings account all from the comfort of their home or on their mobile device. Our mission is to highlight all of the great and reputable companies that offer Canadians that experience. (Vlad)
Smarter Loans has responded to the growing demand for digital financial products and services in Canada by securing working relationships with leading brands that offer financial services online, including chequing and savings accounts, investing solutions, insurance for personal and commercial coverage, international money transfers, debt relief and credit solutions.
The new categories are available to all new and existing Smarter Loans members, everywhere in Canada.
The new categories will help even more Canadians save time and money, and discover great companies that can help them with various financial needs, entirely online.
If you are a financial brand and are interested in discussing partnership opportunities please get in touch with Smarter Loans at: info@smarter.loans.
Lendified Is Still Trying To Pull Through
August 18, 2020
On June 29th, deBanked ran a story titled Canadian Small Business Lender Looks Doomed In Wake of COVID-19. It was about Lendified. Several of the company’s top executives had recently resigned and its financial situation was dismal.
“Lendified is in default in respect of credit facilities with its secured lenders,” the company disclosed at the time. “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, however, no formal agreements in this regard have been concluded as of the date hereof.”
Among the company’s last ditch plans to recapitalize was the raising of equity through a private placement. But that was made impossible by the Ontario Securities Commission who entered an order prohibiting any such transaction for “failing to file certain outstanding continuous disclosure documents in a timely manner.” The filing failures, of course, were due to the issues they were facing. This order just compounded them.
The Commission partially revoked the order on August 14th, paving the way for the private placement to continue. Lendified is only seeking up to $1.4M, the proceeds of which would be used to “pay, among other things, outstanding fees owed to the Company’s auditors and other service providers, public and filing fees, legacy accounts payable as well as for general working capital purposes.” The company further said that “Completion of the Private Placement will help the Company in its efforts to prepare and file the outstanding continuous disclosure documents with the applicable regulatory authorities.”
Lendified offers no guarantees that the private placement will be successful. The company sold off a subsidiary, JUDI.AI, in July.
“People are Starting to Come Out of Their Caves”: How 2M7 got through the lockdown
July 13, 2020
For 2M7, the Toronto-based alternative funding company, the concept of a global economic shutdown was far-fetched. January and February of 2020 had been some of their best months in business yet. But, like every company, 2M7 was forced to reckon with the unreckonable and feel the effects of an economic lockdown.
“In terms of client onboarding and funding volume, in terms of collecting volume, and in terms of any metric you would look at, [January and February] were two very strong months,” CEO Avi Bernstein explained in a call. “And then in March, I don’t want to say we slammed on the brakes, but in the first or second week of March we basically just said, ‘you know what, we just need to really change the focus of what we’re doing.”
Saying that they were a week or two ahead of the curve, Bernstein notes that in the leadup to the shutdown their customers had already been asking for deferred or reduced payments. And with anxiety and concern in the air, 2M7 changed course and moved from focusing on bringing in new customers and increasing collections, they “hunkered down” and worked exclusively on the needs of existing clients.
“We funded throughout very minimally … and really our main effort was to get in touch with all our existing merchants and see how they were being affected, if they needed a payment plan, or if they needed a little bit more capital to tide them over. And we adjusted each one on an ongoing basis as we kind of floated through the panic of the lockdown to the waiting time to when we really started to reopen. … And you know, the ones that were still operating in the kind of environment that they were operating, if they had any additional expenses, they had additional requirements for capital.”
This approach lasted up until mid-June, around the time that the Canadian economy began to reopen. Lasting all of three months, this halting was not without victims as 2M7 had to furlough a number of staff members, many of whom were on the sales team that had reduced responsibilities during this time. Since then though, these employees have been brought back in, new customers have been brought on, and 2M7 has returned to its offices.
“As the Canadian economy started reopening and wrapping up even a little bit earlier than we were, we worked with provinces that were already more advanced in the opening stages. Saskatchewan, Nova Scotia, New Brunswick, Newfoundland, they were doing better in terms of reopening and they were ahead of us. … We were able to work with them in terms of ramping up. Now as the economy’s kicking into gear, we’re seeing more and more demand from businesses and we’ve started feeling our how much of their client base is still in existence, how much of their market is still in existence; whether it be manufacturing or transportation, or whatever it is.”
Looking ahead, Bernstein is cautiously optimistic, believing the worst is behind them but that there is still a ways to go for the Canadian market that has shown resilience in that last four months. Explaining that he think the shutdown won’t lead to any great reset of the Canadian market, the CEO thinks that it will instead act as a catalyst for events that were already in motion: debt-laden companies will struggle and possibly perish.
But beyond that, Bernstein is feeling positive about the future, saying that “people are starting to come out of their caves, and slowly but surely businesses are starting to reopen and invest. A lot of businesses are hiring back their employees. So that’s good news for Canada and good news for small businesses in the Canadian marketplace. … I feel like we’re going to come out okay.”
Canadian Small Business Lender Looks Doomed In Wake of COVID-19
June 29, 2020As 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, Judi.ai, an automated loan underwriting platform, is poised to cease operations as a result of a cashflow shortfall. “[Judi.ai] 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
Last 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
This 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.”
Expressing 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
The 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
The 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.”
