By Cecilia Nasmith
The puzzle pieces for entrepreneurial success in Northumberland County make a more complete picture, now that the financial technology giant Lending Loop has joined forces with Business and Entrepreneurship Centre Northumberland.
A launch of the partnership was celebrated Tuesday at a gathering that features county and municipal officials and Northumberland-Peterborough MPP David Piccini, along with myriad local entrepreneurs and Lending Loop co-founder and chief executive officer Cato Pastoll.
Pastoll explained how Lending Loop works in support of small and medium-sized businesses, and gave some of its history.
The business was started in 2014. Both he and his partner come from small-business families – in fact, his partner's family farmed in Campbellford.
They talked with a number of entrepreneurs who said it was always a hassle to deal with conventional lending institutions for badly needed capital, and it always took up a lot of time. Lending Loop was established to provide a better way with an easy-to-use on-line platform.
“Applying for a loan takes five minutes, and you get an answer in one or two days,” Pastoll said.
“We have actually helped businesses access over $65-million in capital, funded by 11,000 Canadian investors coast-to-coast who wanted to support business in their communities across the country.
“About 50% of this money went to businesses in Ontario, and 10% of those businesses are in rural areas. I hope that's a number we can build on.”
Pastoll cited research that estimates that 35 jobs are created for every $1-million so invested – which puts Lending Loop's track record at 2,400 jobs created.
Trends that have developed over the recent years point to business start-ups growing at a slower rate, partly because of restricted access to financing. Meanwhile, rural bank branches are closing. On the other hand, many more businesses run by women and minorities are being established.
“We want to focus on innovative solutions we can build together to focus on these types of businesses,” he said.
And they're doing it in a new way that is both easier to use and in a friendly, approachable manner that inspires confidence in the applicant.
Another positive trend is the growth in environmentally focused groups that are helping Canadian businesses and individuals transition to a low-carbon economy. Not only are they happy to help the businesses, Pastoll said – they have been inspired to become a carbon-neutral company themselves.
In 2020, they want to lend to more than 1,000 new companies, deploying more than $60-million in the process.
“We are hoping, through this partnership, we can get meaningful amounts of those dollars into businesses in these regions – and perhaps even more, if we continue to get capital flowing through this platform to support more jobs in the area, unlock the potential for more businesses and ignite the local economy.
“And that is a proud mission we drive home every day.”
An entrepreneur himself, Warden Bob Sanderson called the new partnership a momentous event.
“The local economy absolutely depends on strong systems. That can't be done without capital investment,” Sanderson stated.
So often, small entrepreneurs looking for help find that the loans seem to go out more easily to people who already have money – and that the interest rates are higher when they do get financing. The result is a real barrier to entrepreneurship, he said.
“If you don't have the money for start-up, you don't get your business going. That's the key to the whole thing.”
It's important to keep in mind statistics that show that 90% of all private-sector workers are employed by small and medium-sized businesses.
While big companies downsize and disappear, the warden added, their smaller counterparts seem to be more sustainable for a longer period of time.
Piccini was also happy to celebrate the new partnership.
“When we look to the sort of community we all want to be a part of in rural Ontario, what does that mean?” he said.
“Do we want to transport ourselves into the city, or create viable growing and thriving communities right here? I think that's what we all want.
“It's not just good enough to be a retirement community. We want to be a thriving community that is home to entrepreneurs, home to businesses.”
The result is a wealth of opportunity in an area that is more affordable and offers a better quality of life.
And the best part, he said, is that the capital that makes it possible is not solely taxpayer-funded.
Piccini also took the opportunity to commend BECN for their work with local entrepreneurs in a number of areas including that all-important mentorship.
“To see our county looking to lenders and fostering those partnerships is a testament to the team here,” Northumberland Director of Economic Development and Land Use Planning Dan Borowec said that this team has launched hundreds of successful local businesses.
“Leadership is really all about vision,” Borowec said.
“The vision of Northumberland County is to bring together people, partnerships and possibilities for a strong and vibrant Northumberland. And this morning's event truly symbolizes that.”
While providing the opportunities to entrepreneurs is important to Lending Loop, Pastoll also offered a few words about the opportunities to the investors who funnel their capital through this platform.
“It's a two-sided platform. Business can access capital, but the capital actually comes from Canadian investors,” he said.
“Anyone can go on our website and apply to become an investor and invest in businesses both in Northumberland and across Canada.
“When you create an investment account, you can pick and choose the specific businesses you want to invest in.”
There's a $25 fee to join this group, he said. For each transaction, Lending Loop takes a fee of 1.5% and, after that, the investor typically realizes a 7% to 8% return.
“This would not have been possible 15 years ago but, using this technology, anybody can invest in this and that really creates more of a network.”
