Merchant Advance Capital

David Gens, founder of Merchant Advance Capital speaks about the challenges for an entrepreneur in Canada.

David is an award-winning business leader who is passionate about helping Canadian small businesses grow and find the financing they need. David is the founder and CEO of Merchant Advance Capital, which grew from its humble beginnings in his apartment to offices in both Toronto and Vancouver. He now leads one of Canada's largest online small business finance companies.More

Boomers make up 27% of the Canadian population and they run 41% of SMEs - businesses under 100 employees. Is this demographic / psychographic prime for innovative lending adoption in Canada?
Absolutely. Younger demographics such as millennials are more likely to have already explored online / fintech alternatives for their credit needs. Boomers are a prime group to begin exploring / adopting new innovative options. Online lenders need to do more to build credibility.
How can online lenders drive more credibility? Do we need to est. best practices as the OLA have? What will drive the inflection that we have seen in retail e-commerce over the past few years?
Transparency is key to building credibility and trust.
At Merchant, we are always making sure we’re on the safe side of the equation. We’re not trying to ask for forgiveness later. We are transparent about expectations upfront, and this builds trust.
We have many customers who use our services again and again, which we feel is testament to the credibility we’ve established.
What challenges do you see entrepreneurs face when setting up a business?
Cash flow is essential to small business survival, yet many entrepreneurs struggle to pay the bills while they’re waiting for cheques to arrive.
It’s important that entrepreneurs have access to capital that serves them best and more choice is ultimately better for the financial services ecosystem.
There’s more than one way to raise funds, and you can find like-minded organizations that want to help you grow things your way. Establishing credit is a great way to improve the financial health of your business.
How is Merchant Advance Capital expanding its service offering to meet the needs of SMEs?
There are over 1 million SMEs in Canada. In totality they generate billions of dollars for the economy, are great innovators and, above all else, provide millions of jobs. Yet, many SMEs have difficulty securing financing, limiting a company’s ability to grow and thrive.
I set up Merchant to support these underbanked SMEs seven years ago and since then we have provided over $130 million in working capital to over 2,100 businesses.
We have expanded our product offering to include revolving lines of credit, equipment leasing/asset backed loans, and even venture debt for innovative companies. As we and other fintechs continue to innovate, we will see the SME market thrive.
The rise in big data is coinciding with alternative lending going mainstream.
At Merchant, we use technology and data science to evaluate the creditworthiness of borrowers – and the technology is highly sophisticated.
With seven years under our belt, that’s a lot of data that we can mine to make predictions on risk and payback. We use non-traditional underwriting methods to determine creditworthiness, from behavioural data to social media ratings.
This data gives us a more complete picture of a business’ health than the owner’s credit history and allows for faster credit approval.
What is the most exciting benefit or impact that Merchant’s data-driven technology has had on the company, or its audience, to date?
Often, Merchant’s clients borrow with us to rebuild their credit, and finally get themselves to a place where they can borrow from a bank. It’s like graduating. In the future, we anticipate that the flow of capital between banks and alternative lenders will be more seamless.
Additionally, our technology allows us to fund a business the same day that they approach us with a funding request – that is hugely valuable as it allows the small business owner to go back to doing what they do best – running their company.
In closing, what challenges do you see facing the next generation of Canadian entrepreneurs?
We recognize that financial literacy is a problem among young Canadians and we’re building up ways to support the introduction of financial literacy programs to those that will soon be graduating high school.
In order to encourage the next generation of entrepreneurs, teaching young adults core money management skills is crucial.
#MerchantAdvance we look forward to learning how you plan to support financial literacy programs. These are key building blocks for the next generation of Canadian borrowers. David, Thank you for your time today.