Small business online lender OnDeck has expanded its Canadian product offerings.
Small businesses with minimums of $100,000 annual revenue and one year in operation can apply for a credit line from $10,000-$50,000. It can be drawn upon at any time and and can be used for expenses like payroll which cannot be covered by a credit card.
OnDeck also increased the maximum amount of its term loan from $150,000 to $250,000. Beginning at $5,000, the loans are repayable in time frames ranging between six and 24 months..
In two years OnDeck has provided more than $50 million in financing to Canadian businesses. That amount is poised to grow with these new products, OnDeck Canada country manager Gary Fearnall said.
“Small business owners need financing at every stage of their business’ lifecycle, whether to take advantage of growth opportunities like buying inventory, investing in major equipment purchases, or managing cash flow. The new OnDeck Line of Credit, along with the expanded term loan, will provide Canada’s small businesses the growth in capital they need in as little as 24 hours.
“That type of speed and service is exactly what small businesses need to grow in today’s economy.”
Canadian small businesses experience similar issues to their American counterparts, Mr. Fearnall said.
“Small businesses are not served by large banks and institutions just like the United States.”
Their needs are also similar, Mr. Fearnall added – short-term operating capital, inventory, staffing and expansion.
“Differences in the market do exist,” Mr. Fearnall said.
Mr. Fearnall estimates the Canadian market is two to five years behind the United States in terms of market awareness of alternative lending. Most companies are located in Vancouver and Toronto and that is where much of their business comes from.
“Many (other) small businesses are not aware of their options if banks say no to them,” Mr. Fearnall said.
To grow the market, small businesses will need to be educated about different types of lending solutions, their pros and cons, and which one(s) are best for their situation. One marketing tool that works to grow a new industry is an old school method.
“Direct mail was very effective in the United States and it is also working in Canada,” Mr. Fearnall said. “It doesn’t build awareness, it’s more of a lead generator. It doesn’t tell the story on who we are.”
Working with funding advisers, trade associations and chambers of commerce are other methods Mr. Fearnall employs.
As that story gets told, it will include how OnDeck can work with businesses at every stage of their growth cycle.
The more OnDeck works with more Canadian companies, it accumulates more data on how to accurately assess the health of those companies via its OnDeck Score, Mr. Fearnall said. Thousands of data points are used, including Yelp reviews, Google Maps and more traditional ones.
“We are tuning data points to make sure our Canadian scoring models are on par with what we are doing in the United States,” Mr. Fearnall said. “The OnDeck model has proven to be better at identifying the health of a business and their potential of paying back loans.
“Some assume OnDeck is assuming higher risk (on some loans) but that’s not necessarily so because we have a better understanding of their business.”
While Mr. Fearnall is paying attention to the recent troubles in the marketplace lending industry, he does not see them as the beginning of the end.
“Look at Netflix. Five years ago their stock was tanking, but now the story is very different.
“There is a lot of disruption happening in fintech, and my hope is we see some of the benefit from what has happened to smooth it out.
“It’s an exciting time and OnDeck is one of companies leading the way.”