It may be the newest cliché and an understatement, but it is undisputable! Technology is a remarkable game changer and, with warp speed, continues to change the world. Communication. Social interaction. Education. Making information easily accessible with a click.
The limitless potential of online is also transforming business. E-commerce, digital marketing and online job markets are reshaping the way business is done, creating global marketplaces, new ways to earn income and for businesses to find financing.
It was inevitable that online would become an important business option for alternative financing.
Online business loans in Canada provide funding without visiting a bank. The application is online, documents are submitted digitally and decisions happen quickly. Technology evaluates credit, revenue and other key factors, and often grants approval for businesses that banks decline. Traditional banks take longer, require more paperwork and have stricter credit rules.
Digital technology makes borrowing faster and easier for small businesses and startups.
Online or the conventional ways of alternate financing have definite advantages and drawbacks. Traditionally (and notoriously) some businesses turn to alternate financing to get around red tape delays since the business reality is that time is money.
“One of the main reasons businesses seek conventional financing vs alternative financing is cost,” explains Calgary-based Steve Dizep, president of Pillar Capital Corp., the privately held lending company that provides short term loans from $500,000 to $25 million to business owners across Canada.
“Traditional banks and credit unions typically have access to cheaper sources of capital, allowing them to offer interest rates that are lower than those provided by alternative or private lenders. But the conventional banking system in Canada is also heavily regulated, which may provide comfort for some borrowers.
“Alternative financing is a viable option for entrepreneurs as it prioritizes speed and customization. It is the preferred tool for entrepreneurs looking to scale without diluting equity, as it allows for higher leverage and ‘bespoke’ repayment terms (like interest-only periods).
He suggests one reason for the popularity of alternative financing is macroeconomic factors, reduced bank lending and the accessibility of private credit, and notes that alternative credit is a true asset class, with global industry growth reaching $2 trillion.
“Private credit’s rise is mainly due to tighter regulations from conventional banks, which now lend less and are processing credit applications more slowly. Private provide faster approvals and flexible loan terms that banks can’t match. Borrowers benefit from larger, less restrictive loans.”
“In fast-moving markets, the ‘speed premium’ of private credit is often more valuable than a lower interest rate,” Dizep says. “Traditional lenders decline credit requests for small / medium sized businesses that don’t fit the typical bank ‘credit boxes’ but may have significant assets on their balance sheet.”
Online alternate financing may be a new and appealing option because (mostly due to strict Canadian regulatory requirements), many fast-growing, viable companies with strong assets but challenging cash flow are unable to access traditional bank financing.
Fintech financing offers two irresistible features, particularly for small businesses.
Expanded access to capital, because online lenders often use alternative credit assessment methods (like analyzing cash flow and business performance data) which provide a lifeline for small businesses (SMEs). And startups that may not qualify for traditional bank loans due to limited credit history or a lack of physical collateral. It helps to close the credit gap.
Speed and convenience are important features, since the application and approval processes are significantly faster, often taking hours or a few days, compared to the weeks or months required by traditional institutions. The fully online process, from application to e-signatures, saves time and reduces bureaucracy.
According to Lisa Christensen, vice president, Financing with BDC mentions some business pros and cons of conventional vs. alternative financing. “Entrepreneurs today have more financing options than ever, but each comes with trade‑offs.
“Conventional financing, such as loans from banks and credit unions, offers stability, longer repayment terms and lower interest rates, which are an excellent foundation for most businesses. The challenge is that it typically requires strong credit, solid cash flow, detailed financials and collateral, and the approval process can take time. Alternative financing includes solutions offered by fintechs, private credit providers and large platforms like Amazon Lending, Manulife Bank, merchant‑cash‑advance providers and other online lenders.
For some businesses, the recent surge in online alternative financing may also be a welcome right option at the right time.
“2025 was a year of mixed signals for many small businesses,” she adds. “Early in the year, optimism grew as interest rates stabilized, and inflation eased. Then came the abrupt shift in U.S. trade policy, with widespread tariffs – in some cases up to 50 – creating uncertainty and putting pressure on margins and supply chains.
“In response, many entrepreneurs shifted from expansion to preservation, focusing on profitability and productivity. BDC’s research shows that profitability remains the top priority for small businesses, while many are investing in technology to increase efficiency, reduce costs and stay competitive.”
Christensen acknowledges that online options do provide speed and flexibility, especially for entrepreneurs who don’t meet traditional criteria, operate in high‑growth or asset‑light sectors, or need capital quickly. “The trade‑off is that costs are usually higher and terms are shorter.”
The experts agree. Online alternate financing is boosting Canadian businesses by offering faster, more accessible capital through digital applications, quicker decisions and broader criteria than traditional banks, supporting growth and innovation.
There is also caution about challenges inherent to online financing. Cybersecurity risks, complex data privacy compliance and reliance on volatile tech/crypto assets, while forcing a shift towards digital payments and financial tools for better cash flow management.
As fintech and online lending continues to evolve, the legal landscape surrounding commercial lending in Canada is becoming increasingly complex.
Lawyers specializing in commercial lending must be proactive in understanding new technologies and their impact on legal compliance. Collaboration between legal professionals, lenders and regulators are the key to creating a regulatory environment that supports innovation while protecting both businesses and consumers.
While some businesses consider online alternate financing options, they also consider common pros and cons.
There is faster access to capital because digital platforms streamline loan applications, allowing small businesses and startups to get funds in days, not weeks, helping meet urgent operational needs.
Also, broader eligibility because online lenders use alternative data (revenue, cash flow) beyond credit scores, approving businesses often overlooked by traditional banks. And digital transformation to smart business, as the online trend accelerates the shift to electronic payments, forcing businesses to adopt financial tech tools for expense tracking, cash flow forecasting and improved financial visibility.
But there are speedbumps. Cybersecurity and privacy, because increased online activity raises concerns about data breaches and compliance with strict Canadian privacy laws for identity verification. There is also regulatory complexity because evolving crypto regulations and potential cross-border conflicts can create compliance hurdles.
The bottom line is still the bottom line, and a common online financing caution is cost and collateral. Despite digital ease, some businesses still find financing costs too high or face increased demands for collateral.
Online or conventional, for business some things never change. The recent flux in the economy continues to impact, especially financing of small businesses.
“The economic environment for small businesses is currently characterised by a liquidity squeeze,” Dizep points out. “Although inflation has moderated from its highs in 2022, the facts are that elevated interest rates, increasing operating expenses and reduced lending activity by banks have collectively made access to financing more difficult.”