Bartering; the future of small business lending, and giving, according to BarterPay.

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Bartering has the potential to help small businesses, help communities and perhaps even save the world, at least according to John Porter.

 

The self-described social impact entrepreneur founded BarterPay in 2018, offering Canadian small and medium sized business owners a way to capitalize on their excess products and services, or secure a loan. That year Porter also established BarterPay It Forward®, a social-profit arm of BarterPay that allows business owners to donate their extra capacity or unsold products for tax-deductible charitable contributions.

 

Unlike the ancient form of commerce on which it is based, the modern day version of bartering enables companies to trade for a digital medium of exchange, Barter Credits (BP$), which they can use to acquire goods and services from the other 3,500 businesses in the network, and growing.

 

“Bartering is the oldest form of commerce, but for two people to enter into a fair and equitable barter transaction each side has to want what the other person has at the same time, and at the same value,” explains Porter.

To solve that problem Porter built a platform that allows businesses to offer up their goods or services in exchange for Barter Credits that can be used anywhere within the network.

 

“We focus on their spare capacity,” adds Porter. “The fact is that every business can increase their overall gross sales by 5% to 15% without affecting any of their fixed overhead costs.”

 

For example, a golf course always has some unsold tee times they could offer up in exchange for Barter Credits, and then use those credits to purchase lawn care services from another member. The gardeners, however, don’t have to exchange their services for golf; they can use those credits to purchase advertising or printing from another member on the platform.

 

“We’ve taken it from a one-to-one bartering concept to a one-to-many, and we do all the work,” says Porter. “It’s solving this problem for businesses, turning what we call ‘business waste’ into value, because otherwise what’s the value of an unsold tee time?”

 

Not only are Canadian small and medium sized businesses able to utilize their excess capacity to purchase goods and services, but BarterPay also enables them to turn “business waste” into charitable contributions, or small business financing.

 

“We’ve actually been loaning our Barter Credits to small businesses in advance of earning them, like a small business loan, anywhere from BP$5,000 to BP$100,000,” says Porter. “The business can use those Barter Credits to offset immediate cash costs—whether it’s lease hold improvements, a new sign, printing, marketing, video production, stuff to advance their business—and the amazing thing is they don’t pay back the loan in money, they pay back the loan by offering up their own products and services back to the network over time.”

 

For example, Porter says a restaurant was about to spend $25,000 of their available cash to hire an engineering firm to draw up plans for of a second location. “Instead they took a BP$25,000 BarterPay loan, they used an engineering firm in the BarterPay system and paid them using those credits, and over the next two years they just issued $2,000 a month in gift cards back to the BarterPay community to pay off the loan.”

 

The best part, according to Porter, is that it didn’t actually cost the restaurant $25,000 to pay off the loan, because they’re paying back the loan at their wholesale cost of food, which is typically $0.30 on the dollar. At the same time, their heightened presence on the BarterPay network helped to attract new customers.

 

Furthermore, BarterPay only charges an interest rate of between 0.9% and 5.9% on their loans, and offers instant loans with no credit check, financial statements or term limits; just a 25% security deposit. Canadian small and medium sized businesses can register to become part of the BarterPay network by booking a call at barterpay.ca.

 

“We go in, we asses what their needs are, we make sure we have vendors that line up with their needs, they give us a security deposit, we issue a loan and then they can spend it, and pay it back over time with their idle time or excess inventory,” says Porter. “We’ve literally invented a whole new form of small business financing.”

 

The idea is so novel that Porter says he’s in talks with some financial institutions in Canada who are interested in aligning with BarterPay, because they see how it can compliment their product offerings and be an advantage to their current small business clients.

 

Last year BarterPay brokered almost $35,000,000 in transactions between its more than 3,500 members. BarterPay is based in Hamilton, Ontario, but has clusters of between 100 and 500 local members in Victoria B.C., Edmonton, Southern Alberta, Saskatoon, Moosejaw, Regina, Winnipeg, New Brunswick and most of Ontario.

 

“We want to be in every city in Canada that’s over 50,000 people,” says Porter, who hopes to eventually reach 50,000 members coast to coast, and has plans to launch in a number of other countries as well starting with the USA later this year.

 

Helping BarterPay reach that audacious goal is a number of new partnerships with business networks.

“We just signed a deal with the Ontario Chamber of Commerce that wants to promote BarterPay to all 135 chambers across the province,” says Porter. “Restaurants Canada signed a national partnership with us to promote BarterPay to their 37,000 members coast to coast, and Imagine Canada signed a national partnership agreement to promote BarterPay It Forward® to 1000’s of registered charities across the country.”

 

The charity arm of the company has already facilitated the donation of BP$3 million, which is equivalent in value to $3 million Canadian dollars for valuation, accounting and tax purposes.

 

“In order to compete in today’s marketplace, you need to take corporate social responsibility seriously, so we’re encouraging our members to donate some of their Barter Credits to the BarterPay It Forward® Foundation in exchange for a charitable tax receipt dollar for dollar. The BarterPay It Forward® Foundation then doles out the credits to charities across Canada who then utilize the credits to extract the actual goods and services they need from the network.” explains Porter. “We’ve invented a whole new way for businesses to give back to the community without dipping into cash, they simply allow us to convert their idle time and excess inventory into giving.”

 

Porter, who has been in the barter business for over two decades, says he’s thrilled about the impact that BarterPay has been able to make on Canadian small and medium sized businesses, as well as the charitable sector.

 

“Small to medium sized businesses are the lifeblood of the Canadian economy; they are the largest employer in the country, they make up most of the GDP,” he says. “Anything we can do to help these businesses grow and prosper is something we feel really good about. The fact that we can now help our clients give back to the community and make a huge impact makes it even more special”

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Jared Lindzon

Jared Lindzon is an experienced journalist, writer and public speaker. He specializes in Business, Technology, Lending and FinTech industries in Canada and abroad. Jared is a regular contributor to Smarter Loans and top tier publications around the World, including Fortune Magazine, Fast Company, the Guardian, Rolling Stone, the Globe and Mail, and many more.

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