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Canada’s Rising Alt-Lending Competition

Small businesses are borrowing more in Canada, and that means alternative lenders are seeing new opportunities in the nation. Last month Canada-based Crown Capital revealed plans to go public and raise $100 million. Foreign players like OnDeck, meanwhile, have decided to enter the Canadian market.

The competition is heating up and shows no signs of slowing. The latest innovator to capture the market’s attention is Thinking Capital. While it has been operating since 2006 — previously under the name AdvanceIt — the company is heightening its small business lending efforts.

In an interview with the Montreal Gazette this month, Thinking Capital President Peter Mazoff said the firm will finance as many as 300 merchants, offering up to $300,000 in advances. So far, reports said, the company has lent more than $400 million.

But its guidelines are strict. Thinking Capital does not lend to seed-stage startups, and borrowers must have an established cash flow. The company also denies eCommerce and home-based companies, while business applicants must meet minimum monthly sales requirements.

For the borrowers that do qualify, however, Thinking Capital offers quick application responses, the company said. Part of what makes the firm able to do so is its own software and technology to customize loan terms to each borrower, allowing businesses to access working capital in as little as three days.

“We are a financial technology company,” Mazoff said, emphasizing Thinking Capital’s use of algorithms, software and data to assess risk.

It’s a crucial aspect for alternative lenders in Canada, where small business loan repayment delinquencies have increased in recent months. According to PayNet figures published in May, Q1 2015 saw higher rates of moderate and severe delinquencies, meaning bills are more than 30 days and more than 90 days past due, respectively.

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