For the first time, small and medium-size enterprises in Canada will be able to access lines of credit online from a financial institution.
Northern Credit Union says it is the first financial institution to offer this solution online, the company announced Tuesday (Feb. 9), adding that it will first be available only to Ontario-based businesses.
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According to repots, the FI serves 3,000 businesses in Ontario. Businesses can open an account online and access lines of credit when in need of working capital, a service the credit union said can be completed in “a matter of minutes.”
SMEs can access up to $250,000, reports added.
In a statement, Northern Senior Vice President Tony Dunham said the move is a response to the role SMEs play in Canada’s overall economy.
“We know the huge role small business plays in the Northern economy,” he said. “That’s why we’ve invested in thousands of businesses, from Thunder Bay to the Ottawa Valley. These businesses have gone on to create more jobs and growth for our Northern communities — proof that good things happen when you keep your dollars close to home.”
While this may be the first time a small business can access this type of financing from a financial institution online, the online lending business is not new to Canada. Alternative lending platforms have entered the Canadian market in recent years, with locally established alternative finance startups opening doors in the nation, too.
But it hasn’t been smooth sailing for the alt-lending sector. Last month, reports said Investment Industry Association of Canada CEO Ian Russell spoke out against the crowdfunding model of small business finance, instead arguing that SMEs can access funding through the TSX Venture Exchange, the nation’s stock exchange for early-stage businesses.
The remarks ruffled the feathers of the National Crowdfunding Association of Canada and has since sparked a debate about the investment security of alternative financing.