TORONTO–(BUSINESS WIRE)–Today at Exhibition for small and medium-sized enterprises, Caary Capital announces its official launch in Canada and releases new ones Casual Research in collaboration with Xero and the Canadian Lenders Association This paints a picture of a community of small and medium-sized enterprises (SMEs) in Canada struggling to access capital and other essential financial products and services.
“Running independently is always a challenge and many in this community have barely survived the pandemic over the past two years. In fact, 57 percent are struggling to manage cash flow,” said John MacKinlay, CEO of Caary Capital. “What they need now is better access to financial products and services, but our research shows that this has traditionally not been possible for an SME. Caary’s official entry into the Canadian market could not have come at a better time. We look forward to finally and adequately serving this critical segment of our economy with corporate loans that do not require a personal guarantee.”
Although they exist more than 1.2 million SMEs In Canada, it remains an underserved segment of financial services, largely due to outdated risk assessment practices. 70% of SMEs have to risk their personal and family finances to fund their business, either by continuing to rely on a personal credit card for business expenses or by providing a personal guarantee for access to business credit. At the very least, this creates inefficiencies, tying up their personal credit and preventing them from building business credit. In extreme cases, it endangers their personal assets – such as the family home.
“Owners clearly carry risks that should be the company’s responsibility,” said Gary Schwartz, president of the Canadian Lenders Association. “The good news is that fintechs are beginning to turn the tide for Canada’s smaller businesses by implementing proprietary and non-traditional credit scoring methods. By analyzing a company based on a range of alternative data in an open banking environment, companies like Caary Capital are conducting accelerated, nuanced risk assessments and offering products that ease pressure on cash flow.”
Key highlights of the study include:
57% of SMEs state that managing cash flow is currently difficult – significantly more than before the pandemic (41%).
46% of SMEs had to provide a personal guarantee to access business loans.
64% continue to rely on a personal credit card for business expenses. 68% say this has caused difficulties, mainly due to high interest rates, reconciling spending at the end of the month and exhausting credit limits.
37% of those who rely on personal cards use them for more than 40% of their total monthly business expenses.
35% found it difficult to access business credit and 30% found it difficult to access essential financial products and services.
A third (36%) have experienced delays in obtaining a corporate credit card for their business.
40% are familiar with open banking or consumer finance. 54% would consider a provider using open banking if it meant easier access to corporate credit, and almost half (47%) would share more of their data for better access to superior financial products and services .
41% of executives say they would consider personal loans to manage their company’s cash flow.
People aged 34 and younger are significantly more likely to have difficulty accessing business credit (46%) and essential financial products and services (40%) than those aged 35 and older.
“The study suggests that access to credit is an issue, as is time-consuming expense and cash flow management,” said Faye Pang, country manager of Xero Canada. “As more FinTech companies enter this space with innovative ways to serve the SMB segment, we look forward to further partnerships and integrations that help solve the cost and spend management side of the business. This is a win-win for the SME community and will help create more opportunities for Canadian business owners.”
The Business Mastercard from Caary Capital® and fintech platform gives companies complete control over their spend and automates spend management. The Caary Business Mastercard includes 1.5% cashback, no fees (including no exchange fees), virtual cards for employees or suppliers and no personal guarantee required. To enable this, Caary rates an SME based on cash flow and assets as opposed to credit history. The company has to date launched its product through key industry partners when it opens its doors to Canada’s broad SME segment.
Visit caary.com to Download more insights from the study.
About the Leger study
These are some of the findings of a recent Leger survey conducted on behalf of Caary. An online survey of 403 Canadian small (1-99 employees) or medium-sized (100-499 employees) business leaders (owner/co-owner/operator/senior executives/executive team members/decision makers) between June 3 and June 17, 2022, using Leger’s online panel.
A margin of error cannot be associated with a non-probability sample (ie a web panel in this case). However, for comparison purposes, a probability sample of 403 respondents would have an error rate of ±4.9%, 19 out of 20.
About Caary Capital Ltd
Caary is a fintech platform for small and medium-sized enterprises (SMEs) led by the Caary Business Mastercard®. With Caary, SMBs can better control their spend and automate spend management. The Caary platform offers 1.5% cashback on all expenses, no fees, no foreign exchange fees, and self-directed employee and supplier cards. 98% of Canadian companies are SMEs. Accessible credit cards, capital, and fintech products are the tools that help them stay competitive, grow, and thrive. Visit caary.com for more.
About the Canadian Lenders Association
The Canadian Lenders Association (CLA) is an industry association representing more than 250 companies across the financial services spectrum. From banks to FinTechs, the CLA supports innovation across all consumer and commercial lending sectors. All CLA members are committed to meeting the needs of a new generation of Canadian borrowers through the following mandates: principled and professional practices, financial education for the general public; encouraging individual potential borrowers to take control of their financial autonomy; and advocate for innovative lenders and represent their interests. The association supports lending nationally and internationally to advance the goals of the sector and promote a more equitable and innovative future of lending. Visit www.canadianlenders.org to learn more about the CLA.
Xero is a cloud-based accounting software platform for small businesses with over 3 million subscribers worldwide. Through Xero, small business owners and their advisors have access to real-time financial data anytime, anywhere, and on any device. Xero offers an ecosystem of over 1,000 third-party apps and over 300 connections to banks and other financial partners. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), backed by the S&P Global Corporate Sustainability Assessment. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognized by IDC MarketScape as a Leader in its Global Vendor Assessment of SaaS and Cloud-enabled Small Business Finance and Accounting Applications.