CLA’s Open Letter to Canadian Government: Why Small Businesses Need FinTech Lenders to Survive COVID-19

On March 17th, Prime Minister Justin Trudeau announced the Business Credit Availability Program, which dedicates $10 billion to support small businesses through the COVID-19 pandemic. The funds would be disbursed to eligible businesses via the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). Businesses that qualify would receive working capital loans of up to $2 million, with flexible terms and payment posponements for up to 6 months.


This relief measure is much needed and should be commended, however it leaves a massive gap in access to capital for the truly small businesses that will not qualify for this program, such as restaurants, beauty salons and retail stores, to name a few.


A recent survey by the Canadian Federation of Independent Business (CFIB) showed that the economic fallout could force 1 in 4 small businesses to permanently close their doors in the next month alone. These businesses are at risk of being forgotten and facing permanent closures, if something is not done, and fast.


Today, March 24th, 2020, the Canadian Lenders Association (CLA) and its members have published an open letter to the Government of Canada, to address this concern. After all, for SMBs that are largely underserved by the the traditional banking sector, it is the FinTech lenders that have helped tens of thousands of small businesses grow and expand, with fast access to credit, usually with amounts of $25,000 – $100,000.


CLA members are proposing that the Government of Canada leverages the digital advances, such as speed and automation or credit approval and disbursement, so that the stimulus package can reach the broadest spectrum of small businesses that need help.


Similar programs are being discussed in the United States, UK, and Australia, where the FinTech sectors are also very strong. In Canada, CLA’s FinTech lenders estimate that with a government-backed loan program, they can quickly reach and provide credit to over 100,000 small businesses that desperately need relief during these difficult times.


Copy of Complete Letter by the CLA to Canadian Government Follows Below (Source: Canadian Lenders Association)



Open letter to the Government of Canada: Canadian small businesses need alternative lending options during COVID-19


The Canadian Lenders Association and its members ask the Government of Canada to extend their proposed economic stimulus for small businesses to include alternative lending options.


The Right Honourable Prime Minister Justin Trudeau
The Honourable Bill Morneau
The Honourable Mary Ng
The Honourable Navdeep Bains
The Honourable Chrystia Freeland
The Honourable Jean-Yves Duclos The Honourable Pablo Rodriguez


Dear Prime Minister Trudeau, Mr. Morneau, Ms. Ng, Mr. Bains, Ms. Freeland, Mr. Duclos, and Mr. Rodriguez:


Thank you for your ongoing work to keep Canadians safe from COVID-19 and mitigating this unprecedented health crisis. ​The member companies of the Canadian Lenders Association (the “​CLA​”)1 are committed to working with lawmakers to help ensure that the proposed economic stimulus measures are effective and expeditious, particularly for small businesses.


The CLA members strongly support the Government of Canada’s $10 billion capital allocation to BDC/EDC. ​However, tens of thousands of truly small businesses, such as restaurants, retail stores and auto repair shops, may not be adequately served for three reasons:


  1. these businesses do not meet traditional financial institutions’ credit requirements;
  2. the loan amounts required by these businesses are relatively small, placing them at a lower priority by those tasked with deploying capital; and
  3. the volume of time-sensitive credit requests from small businesses are likely to overwhelm traditional financial institutions and underwriting processes.


As a result, Canadians may be faced with the prospect of leaving behind those truly small businesses which are most affected by this crisis, and are most likely to fail.


These local businesses are currently being serviced extensively by the non-bank, financial technology (“​Fintech​”) sector. Fintech companies represented by the CLA are uniquely positioned to be able to reach those most in need as a result of advancements in automation and speed of credit approval. Fintech companies deploy capital, quickly and efficiently to customers that are largely underserved by the traditional banking sector.


It is essential that the Government of Canada’s capital allocation leverage digital advances in the marketplace to ensure that the stimulus reaches the broadest cross-section of small businesses in need. ​Fintech lenders act as efficient distribution points for capital because of their extensive small business customer databases and existing relationships, as well as their automated approaches to application processing, underwriting and direct deposit capabilities.


CLA member companies have made over $2 billion available in the past several years, primarily to local storefront businesses. At loan sizes that typically range from $25,000 – $100,000, $2 billion represents tens of thousands of small businesses, which in turn support hundreds of thousands of Canadian workers.​ Under a government-backed loan program, the CLA estimates that its member companies can quickly reach and provide credit to over 100,000 small businesses, that may not be served by traditional financial institutions. The member companies of the CLA are committed to working with the Government of Canada to help ensure that any economic stimulus relief can be accessed broadly by small business owners across Canada in an effective and expeditious manner.


With support of the BDC, Canadian banks, and the Fintech community, the Government of Canada has the best chance to reach the largest number of businesses and ensure that the most vulnerable businesses in our economy survive.


To expedite capital flow to these small businesses, the CLA and its members propose to work with the BDC (or any other entity) to leverage our platforms in deploying government-backed funding. ​This would include collaborating on eligibility criteria and determining operational mechanics of the program. Time is of the essence and we are committed to implementing a program in as soon as 3 – 5 business days.


The CLA understands that Financial Innovation Now, an alliance of Fintech leaders (including Apple, Square and Paypal), has reached out to congress in the United States with a similar proposal to deploy capital to those small businesses most in need. We also understand that similar programs are being put in place between governments and Fintech companies in the United Kingdom and Australia.


The CLA deeply appreciates your work during this unprecedented time, and we look forward to assisting with the immense challenges of this pandemic.



Gary Schwartz

Canadian Lenders Association


About the Canadian Lenders Association

The CLA supports the growth of companies that are in the business of lending, or providing other means of credit, to small businesses and individuals using innovative means to exchange ideas and explore ways of improving the sector; encourage principled and professional practices; educate the public at large about innovative lending; encourage potential borrowers to be informed about the appropriateness of innovative lending to their circumstances; and to advocate on behalf of, and represent the interests of, innovative lenders. To learn more about the CLA, please visit its websites at:​ and at ​​.


For further information:

Media Inquires: Lauren Arnold | Talk Shop Media | 647-869-1438 | ​

David Gens | CEO, Merchant Growth & Co-Chair CLA COVID-19 Working Group |778-895-9208|

Neil Wechsler | CEO, OnDeck & Co-Chair CLA COVID-19 Working Group | 514-927-9600 |


1 The CLA Covid-19 working group includes the following financial technology companies: OnDeck, Merchant Growth, Lendified, Lending Loop, BFS Capital and Thinking Capital, among others.


Source: Canadian Lenders Association.

This open letter was originally published on the Canadian Lenders Association’s website. Click here to view.


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Smarter Loans Staff

The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada's highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the "GPS of Fintech Lending" by the Toronto Star in 2019.