John Mackinlay is CEO of Caary Capital, a credit and spend management platform for small and medium-sized enterprises in Canada. John is a 25-year veteran of the investment, financial services and technology space. Prior to joining Caary, he held executive roles at PwC and IBM and served as an advisor to National Australia Bank and OMERS.
What was the motivation behind launching Caary? And what goals are you hoping to achieve?
At the heart of Caary is our desire to help small and medium-sized businesses succeed. We have 1.2 million SMEs in Canada, but they struggle to access corporate credit and other key financial tools from traditional lenders and financial services companies.
Caary was founded by lifelong entrepreneurs, so we have first-hand experience of how difficult it is to fund and grow a small business in Canada. In fact, our co-founders – Steve Apostolopoulos and Jason Sawyer – were turned down when they approached their bank to get a credit card for Caary, and we had 1.6 million in the bank!
This is the reality of so many SMEs in Canada, and it just adds to the stress of the COVID-19 pandemic. We built Caary to provide SMEs with the corporate credit and financial tools they need and deserve. Our fintech platform delivers corporate credit that doesn’t require a personal guarantee, as well as spend management tools tailored to the daily needs of running a small business. We officially launched in Canada at the end of June, and we’re excited to be making a difference for the SME community.
What are your thoughts about the Léger study commissioned by Caary in partnership with Xero and the Canadian Lenders Association? What were some of the key findings of the study?
The study illustrates that accessing business credit is a slow and complex process full of personal risk for small business owners. I was especially struck by the fact that 70 percent of SME owners have to put their personal and family finances at risk to fund their business, either by relying on a personal credit card for business expenses or providing a personal guarantee to access corporate credit.
Another finding is that 57 percent of SMEs say it’s currently challenging to manage cash flow – this is significantly higher than pre-pandemic (which was 41 percent). It’s clear that SMEs aren’t receiving the support they need to stay afloat, even in the wake of a very difficult two years.
And this is especially impacting young SME owners. The report shows that those aged 34 or younger find it significantly more difficult to access both business credit (46 percent) and key financial products and services (40 percent). That’s a major barrier to innovation in Canada if our young entrepreneurs don’t feel they have access to the financial tools needed to start a business.
How is Caary Capital helping SME owners to fund their business without putting their personal and family finances at risk?
Most Canadian banks look at business credit history to assess credit worthiness, which many SMEs don’t have. At Caary, we use alternative data to evaluate a business and determine a deep understanding of credit capacity; we look at cash flow of the business, we run our own sensitivity analysis and seasonality analysis, and we look at industry trends and growth.
As a result, we can extend corporate credit to SMEs with no personal guarantees required, backed by the Caary Business Mastercard®. This allows entrepreneurs to build business credit while leaving their personal credit untouched. And the entire process is digital, so the business owner never has to set foot in a branch.
It was important to us that the Caary card has no fees, including no foreign transaction fees, and comes with 1.5% cash back on all spend. And it’s very easy for our customers to manage the entire card program from a self-serve dashboard. They can issue or cancel virtual and physical cards, set spend limits and expiry dates, track spend, and lots more. So in addition to corporate credit, SMEs get tools to help them automate expense management and stay in control of spending.
How is fintech disrupting the financial sector and impacting Canada’s economy?
Fintech is offering an alternative to traditional financial institutions and creating much-needed competition, which is especially important for SMEs. And we’ll see even more fintech emerge once we have a proper open banking regime in Canada.
For anyone unfamiliar with open banking technology, it allows you to securely share financial data with a third-party organization that offers financial services you find valuable, such as spend insights or better accounting integrations. Basically, it puts the power of choice back in the hands of consumers and small business owners.
Open banking is alive and well and supported by a regular regime in progressive economies, including the UK, Australia, and the European Union. We’re a bit behind in Canada, but the federal government recently appointed Abraham Tachjian to develop a made-in-Canada approach to open banking, so the early signs of adoption are there.
And the demand is there, too. The Léger study found that 54 percent of SMEs would consider a provider that used open banking if it meant easier access to corporate credit, and nearly half (47 percent) would exchange more of their data for better access to superior financial products and services.
So fintech is really putting pressure on Canada to progress with open banking, which is an important next step. 98 percent of Canada’s businesses are SMEs, and they employ 70 percent of the workforce. When this segment has the power to choose which financial tools and products best serve their needs, we all stand to benefit.
What are some strategic tips through which small businesses can control their spending and automate expense management?
It’s a difficult time, so I’d tell small businesses to hold your powder. Look for alternative sources of financing. Look at credit or charge cards as an option to strategically manage cash flow. And consider alternative service providers – like fintech – with creative solutions to meet your needs. Traditional financial institutions are not your only option and are not the only solution out there.