You heard right, alternative lending is booming in Canada, and here’s how they can help small businesses. Every year, almost a third of small businesses in Canada find themselves in need of a loan. The problem is that the average bank loan application takes days to complete and can take a few weeks before it is assessed, let alone approved for the funds to be disbursed.

Overall, traditional banking is suffering from outdated and inefficient processes which do not meet the demands of fast-paced startups and millennials. A recent article published by TechCrunch stated that “Tech is coming for banking, and unwary banks will quickly be replaced by startups.”

Many factors are taken into account while assessing an application such as credit score, collateral, and or cash-flow. However, banks are more likely to reject small loan applications as they are just not profitable for them so “accepting a loan under $1 million is a business model that often doesn’t make any sense” Gary Fearnall, Canadian manager for OnDeck Capital. 

Luckily for Canadian small businesses there are new players in town that are ready to rock the Canadian financial paradigm, filling the gap left by banks.  Regardless of the businesses credit score, alternative lending may be available as long as they have been operating for at least six months and have some cash flow.

Alternative lenders tap into thousands of data sources using proprietary software in order to quickly assess one’s loan eligibility and ability to pay back a loan. This quick method allows lenders to hand out capital quickly; usually delivering funding between 24 and 72 hours after an application has been filled out. When it comes to funding in general and particularly if a short turnaround is needed, options for small businesses are limited; therefore, despite higher costs, entrepreneurs do opt for these alternative lending options.

Here’s a quick overview of the main alternative lending products available:

Merchant Advance: Get a capital advance by exchanging a fixed dollar amount of the company’s future credit and/or debit card receivables (sales) at a discounted price. 

Business Loan: Designed for businesses who might not have debit and credit card sales, this program is ideal for businesses who prefer a fixed daily repayment schedule.

Invoice Financing: Get an advance on outstanding invoices without waiting for customer payment. 

Check out our new alternative lending partners:

OnDeck: evaluates businesses based on their actual performance rather than solely on their personal credit. Entrepreneurs can get up to a 2 year term loan of $5,000 to $150,000. 

FundThrough: is a Toronto-based invoice financing company that can get your outstanding invoices paid in 24 hours. 

Merchant Advance Capital: is a Vancouver-based alternative lender that provides merchant advances and small business loans. Canadian businesses can get cash advances of $5,000-$500,000 per location.