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There’s A Little Light At The End Of The Tunnel – For Some

After a three-month shutdown due to COVID we’ve re-opened Company Capital and are lending again to new and current customers. April, May, and June were difficult if not devastating months for most small businesses across Canada but we are now seeing and hearing some positive – albeit gradual – results. The results vary widely by industry (tourism vs grocery for example) but according to the Canadian Federation of Independent Business 63% of small businesses are now fully open compared to only 21% at the end of March

You can see all the CFIB survey results here


Here at Company Capital, at the peak of the pandemic in April, we had more than half our client base on reduced or suspended payments. As of August only 14% of our customers remain on reduced payments.

Weathering the storm

We are a relatively small company compared to most of our competitors and, as such, we were able to react faster than most. The pandemic was declared on March 11 and by March 12 we were all working from home. Within a few days we had laid off 50% of our staff, ceased all advertising and stopped all spending on technology development. We are now gradually and cautiously getting back to business.

Unfortunately, some of the larger companies in the online lending space didn’t fair quite as well.

On Deck, one of the largest lenders in the US (and Canada) did not make it through the pandemic. The Company sold for $90 million almost 6 years after an initial public offering that had valued the company at $1.85 billion. Most people would call this a “fire sale”. In 14 years they were never profitable.

Read the On Deck story here

Other publicly traded lenders have reported similar devastating financial results. IOU Financial in Montreal reported a 71% share value decrease from February to April. Lending Club (US) reported a 65% decrease in share value from February to June.

Lendified – a Toronto based online business lender and a friendly competitor to Company Capital is also having a difficult time with a 95% drop in share price.

Read the Lendified story here

Most of these companies shared a couple common strategies:

  • Sacrifice profit for growth and market share
  • Automate everything

Sacrificing profit for growth is a reality for every new business for the first couple years but to continue on this path for 14 years is obviously not a sustainable business strategy. At Company Capital we did the opposite – we sacrificed growth for profitability – and after 3 years in business (2014) became profitable and have never looked back.

Automation is all about implementing a system to complete tedious, repetitive, easily replicated tasks without the need for human labour. Things like inventory ordering, document approvals, email marketing and payment processing are mundane business processes that have been automated.

Approving business loans is not a mundane or a repetitive process. Every small business has a different story to tell and listening to these stories cannot be automated.

Here’s our perspective on automation

Smarter Loans 2019 article

Smarter Loans 2017 article

Although we’ve automated most of our processes on a single platform (Salesforce) we’ve always had a team of humans review every application, speak to every applicant and listen to their story.

And now, during the pandemic, most lenders are touting “new” strategies of less automation and more human contact. “It’s not all about the data right now” said a senior executive of a US company in a Lending After Lockdown webinar. She went on to say “all small businesses are different – they all have a story to tell”

We couldn’t have said it better ourselves – oh wait, we did – about 5 years ago


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