Loop Raises $4.7 Million for Small Business Money Movement Service

Loop raised $6.4 million CAD ($4.7 million) to expand its financial management platform for small businesses.

The funding comes on top of a $4 million CAD ($2.9 million) round in 2022, according to a Tuesday (Sept. 17) press release.

“Modern companies are built to operate globally, yet the process of setting up banking services to conduct business in a foreign market in order to send, receive and manage money is an expensive and challenging barrier to overcome for businesses,” Loop CEO and co-founder Cato Pastoll said in the release. “We’re excited to take the next step forward on our mission to help businesses grow faster globally by providing them with the key tools required to manage their money internationally. With the support from our investors, Loop will be able to move even faster on our mission to build a financial services offering that is truly global-by-default.”

Launched in 2022, Toronto-based Loop — which shares a name with a returns management provider and a transportation logistics startup — works with small- to medium-sized businesses (SMBs) to address a variety of pain points, per the release.

These include issues like high banking fees, time-consuming payment processes and trouble navigating cross-border money movement, according to the release.

“Although most U.S. and Canadian exporters are SMBs, they are grossly underserved by the large banks, especially in cross-border banking,” said Raif Barbaros, whose Mistral Venture Partners took part in the funding round.

The May PYMNTS Intelligence report “Can Blockchain Solve the Cross-Border Payments Puzzle?” examined the potential for blockchain technology to solve cross-border payment issues, including high fees, slow settlement times and poor transparency.

“High fees and slow processing times dominate the list of problems with traditional cross-border payment systems,” PYMNTS wrote last week. “Methods rely on correspondent banks and clearing houses, introducing inefficiencies.”

A lack of transparency in traditional payments systems only exacerbates existing challenges. Last year, American eCommerce companies saw an 11% failure rate in cross-border transactions, leading to $3.8 billion in lost sales.

“The difficulty in identifying the cause of failure impedes recovery efforts and erodes customer trust, underscoring the need for a more efficient and transparent payment solution,” PYMNTS wrote.

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