National Post (National Edition)
Business booming at BDC amid tech-driven strategy
Loan app expedites credit requests
TORONTO • The Business Development Bank of Canada is so focused on delivering money to Canadian entrepreneurs that it is issuing loans of up to $750,000 on an iPad app in less time than it takes to brew a pot of coffee.
In BDC’s annual report, the bank revealed that since November of 2017 they’ve actually issued more than 3,000 such loans through the BDC Express Loan app, saving 26,000 hours of work. All 600 account managers with the bank are equipped with mobile devices to approve loans in a single site visit.
Loans can be approved in 30 minutes, but Michael Denham, president and chief executive for BDC, said it’s often quite a bit faster.
“I think people know how focused I am on the Express Loans, so when things happen very, very rapidly, they give me a call,” Denham said. “In some cases we’ve done it in five or 10 minutes.”
BDC is fond of saying they’re in the business of moving fast, because they’re in the business of supporting entrepreneurs, and the 2019 annual report shows that business is good.
Denham said the Express Loan app is only for existing clients, so there isn’t really any added risk to a speedy approval, since most of the due diligence is already done.
“We look at the client, the history, the credit history, et cetera, so we know in advance how much we’re comfortable authorizing,” Denham said in an interview with the Financial Post.
“When we sit down with a client we can do the tailoring of the actual amount, interest rate options, terms options, but it’s all within parameters that we’ve approved in advance.”
Over the past year, BDC issued $7.2 billion in loans, and in total the bank has nearly $35 billion in capital committed to small- and medium-sized companies in Canada.
The bank, which is a Crown corporation owned by the federal government, announced that it posted net income of $885.6 million in the fiscal year ending March 31, 2019, and that it will be returning a $128-million dividend to the government.
In recent years, the BDC has been keeping most of its profit as retained earnings in order to grow its balance sheet. Over the past five years, net income has grown steadily and cumulatively totalled nearly $3.2 billion, with $330 million returned to the federal government. Denham said that growing the bank’s balance sheet is important.
“It’ s not growth for growth’s sake. It’s growth for a purpose, and the purpose is to be there to fill the gaps, to make sure entrepreneurs have what they need to grow,” he said.
“We’re focused on growing so that entrepreneurs have us as an option to meet their financing and advisory requirements. So when I look at the research we’ve done and the responses to surveys around access to capital etc. I continue to believe that we need to keep in the market, continue to grow to be there for entrepreneurs.”
One focus for BDC in recent years has been the venture capital ecosystem in Canada, which provides funding for startups that need help getting off the ground.
Denham said he believes that right now the availability of venture capital in Canada is as good as any time in the past 20 years, so the bank is focusing on specific niches, including a $200 million fund for women-led startups, as well as industrial innovation for traditional sectors of the economy like manufacturing.