Running a business has never been easy. But the current environment — shifting tariffs, tightening credit, customers stretching payment terms, and traditional lenders pulling back — has made managing cash flow genuinely harder than it’s been in years.
That was the starting point for our recent Capital Connects webinar, The Future of Lending: Why Alternative Financing Is Becoming the New Normal. Jonathan Brindley, Scott Marsh, and Stefanie Turner walked through what’s changing in the lending landscape, what it means for Canadian SMBs, and how alternative financing tools can give businesses more options before they’re under pressure.
Here’s what was covered.
We’ve moved from uncertainty to chaos — and businesses need to plan accordingly
Jonathan opened by naming something that a lot of business owners are feeling but not always saying out loud: we haven’t just been dealing with uncertainty for the past few years. The combination of tariff volatility, rising input costs, customers delaying payments, and traditional lenders tightening approval criteria has created a level of disruption that goes beyond the usual headwinds.
One example he shared: a company whose monthly fuel costs doubled from $100,000 to $200,000 — the kind of shock that hits cash flow immediately, regardless of how strong the business is.
The key takeaway isn’t that things are hopeless. It’s that businesses that understand their cash flow cycle and have financing options in place before they need them are in a fundamentally stronger position than those who wait.
The real problem is timing, not demand
Stefanie framed it clearly: most businesses aren’t struggling because they lack customers or sales. They’re struggling because cash isn’t moving through the business at the same speed as operations.
The gap between delivering a product or service and actually receiving payment — the cash conversion cycle — is where the pressure gets created. Customers are taking longer to pay. Suppliers still need to be paid up front or on short terms. And when a business is growing, that timing mismatch can get worse before it gets better, even when revenue is climbing.
Understanding and actively managing that cycle, she explained, is the foundation of sound working capital strategy.
The solutions: a quick overview
The webinar walked through four alternative financing tools Capitally offers, and how each one addresses a different point in the cash flow cycle.
Invoice Factoring is the most accessible entry point for many businesses. Rather than waiting 30, 60, or even 90 days to collect on outstanding invoices, factoring converts those receivables into immediate working capital. Approval is based primarily on the creditworthiness of your customers — not just your own financial history — which opens the door for companies that are strong operationally but don’t fit traditional lending criteria. Funding can happen within 48 hours.
One case study featured a high-growth manufacturing company in the filtration technology space. Despite strong customer demand and globally recognized clients, they couldn’t secure bank financing due to limited operating history. Factoring allowed them to unlock cash tied up in their receivables, purchase materials, and scale production. Within a relatively short period, they built the financial track record needed to secure traditional bank financing.
Purchase Order Financing solves a different problem: what happens before the invoice even exists. When a business receives a large purchase order but lacks the working capital to pay its supplier and fulfil the order, PO financing bridges that gap. Capitally provides the capital to pay the supplier; once goods are delivered and an invoice is generated, factoring takes over to repay the PO facility and return working capital to the client.
Jonathan walked through the story of two entrepreneurs who designed specialized gardening gloves and landed a $400,000 order from Home Depot — spanning both Canadian and US locations. The challenge was a three-to-four month gap between receiving the order and receiving payment, with goods needing to be manufactured and shipped from overseas. A combined PO financing and factoring solution allowed them to fulfil the order, build a track record with Home Depot, attract additional orders, and — 18 months later — qualify for a traditional bank line of credit.
Supply Chain Finance is suited to more established businesses that already have strong banking and vendor relationships but periodically face large orders that strain their operating line. In this model, Capitally effectively steps in as the client’s vendor, paying the supplier directly and issuing the client an invoice with extended terms that align with their customer payment cycle. This frees up the bank line for regular day-to-day operations.
Scott’s example here was an oil and gas supply company that had been operating for several decades. A few times per year, they received large orders — in the $1.25M to $1.5M USD range — that they could handle, but only by constraining their regular cash flow for up to 60 days. A supply chain finance facility eliminated that constraint and allowed the company to grow revenue by an estimated 8–10% above what would otherwise have been possible.
Asset-Based Lending (ABL) is typically suited to larger, more complex businesses. It functions as a revolving line of credit secured against working capital assets — primarily accounts receivable and inventory, sometimes equipment — with availability calculated on an ongoing basis as those asset levels change. Capitally’s approach differs from traditional ABL lenders in that it takes a deeper look at the creditworthiness of specific debtors, which can allow for higher advance rates in some cases.
The case study here involved a third-generation office furniture company that had been in business for nearly 100 years. After a drop in sales caused them to fall offside with bank covenants, they were moved into “special loans” — effectively being exited by their bank. Capitally structured an ABL facility against their receivables, inventory, and equipment, which gave them the liquidity to repay the bank and the runway to restructure. After approximately 18 months, they successfully transitioned back to conventional commercial banking.
A few things that often surprise people
Several questions from attendees are worth highlighting here.
On international receivables: yes, Capitally can finance receivables from customers outside Canada and the US. Through a partnership with AIG, they’re able to assess the creditworthiness of foreign debtors and have financed receivables in European markets and as far as India. The same diligence standards apply regardless of geography.
On contract terms: factoring generally doesn’t require a minimum term or carry cancellation fees. PO financing and supply chain finance may carry a 12-month minimum term given the effort involved in setting up those facilities, but most clients in those scenarios expect to be working with Capitally for 18–24 months anyway. The goal is always to support clients until they’re ready to graduate to conventional banking — not to lock them in.
On who isn’t a good fit: businesses with very short invoice cycles, minimal accounts receivable, or systemic operational challenges — missed delivery dates, weak systems, vendor instability — are harder to support effectively. Factoring works best when the underlying business is fundamentally sound and the constraint is cash timing, not business viability.
The bigger picture
Jonathan closed with a framing that stuck: Canada is built on small and medium-sized enterprises, and those businesses need fuel to keep running. Cash flow is that fuel. Alternative financing isn’t a replacement for banking — it’s a complement to it, a way to build and sustain the momentum that eventually makes conventional bank financing accessible.
The businesses that will navigate the next 12 to 24 months most successfully, as Stefanie put it, are the ones that take time now to understand what tools are available to them — so that when an opportunity arrives or a challenge hits, they’re not starting from scratch.
Wondering if alternative financing could work for your business?
Take our quick Factoring Suitability Assessment to find out. Or reach out directly to Jonathan, Scott, or Stefanie — we’re happy to have a conversation.
