Small and Medium businesses are the backbone of the Canadian economy. Over 90% of the Canadian workforce is employed by SMB’s, while they are also responsible for 25% of Canadian exports. Furthermore, according to the Canadian Chamber of Commerce, SMB’s generate 30% of the Canadian GDP.
While the Covid-19 pandemic has disrupted the entire global economy, small and medium businesses have been disproportionately affected. Small businesses with less than 100 employees have been most susceptible to the adverse effects of the pandemic, with most small businesses reporting a revenue of drop of over 20% from the first quarter of the year to the second quarter of 2020. There has also been an influx of credit requests from lower market firms, who are in desperate need of financing in order to cover operational costs in the face of decreasing revenues.
The Business Development Bank of Canada (BDC) is responsible for supporting Entrepreneurs with financing in the form of Small Business Loans, advisory services and Capital raises. They are also offering SMB’s affected by Covid-19 Small Business Loans of up to $40,000 through their CEBA program. However, many young entrepreneurs find it difficult to get Loans from the BDC due to stringent requirements. Other than paper work, businesses must be operational and revenue generating for 2 years.
Thus, many small businesses are turning towards alternative lenders as a source of financing. Kingsmen Capital provides unsecured business loans from $5000 up to $500,000. This is an especially useful option for entrepreneurs who don’t own a home or any other property, as loans are based solely on cash flow generated by the business. In addition to this, financing is received within a week of application, making it an ideal solution for bridge financing, inventory or immediate liquidity purposes. Kingsmen Capital also provides equipment and secured financing solutions to small businesses who own some form of equipment or real estate. Alternative lenders have become a popular source of small business loans for clients who have fallen out of traditional banking covenants due to the ease of application, quick funding time, and less stringent credit requirements.