Home Month and Year December 2020 Stuck in the Middle? Banking Solutions for Mid-Sized Businesses

Stuck in the Middle? Banking Solutions for Mid-Sized Businesses


The COVID-19 environment has seen a number of financial assistance programs launched or adjusted to account for the economic impacts of the global health pandemic. From payment deferrals to grants, several economic reliefs have been introduced to stimulate a struggling local economy. Small and large business have traditionally been the targets of fiscal programs, but what about businesses caught in between?

As explained by Jon Horsman, senior executive vice president of business at ATB Financial and CEO of ATB Capital Markets, there are options out there for mid-sized businesses in Alberta.  

“There are programs, like the Business Credit Availability Program (BCAP) for example, available through partnering with ATB or another financial institution. These programs provide incremental debt, often with longer tenure, and are a good way to bridge companies into a more normal economic environment,” Horsman shares. “However, the key is to assess the unique needs and position of each business. For some businesses, taking on more debt is not the best decision. In other cases, equity would be a better fit and would preserve the long-term health of the company.” 

For businesses looking for banking assistance, Horsman notes the importance of finding a bank with industry knowledge and a demonstrated commitment to helping businesses thrive, no matter the financial climate.

“Ensure that your financial institution understands your unique business. We know the pandemic has not affected every industry in the same way. Be open with your financial institution. The better we understand your company’s situation, the more we can help,” he notes. “Communication and trust are key. I have seen time and time again the benefits that a solid relationship with your financial institution can bring. I know that almost any economic climate can be navigated when trust exists because we can provide solutions that are tailored specifically for your business.”

Getting down to financial strategy specifics, Horsman identifies “cash flow forecasting” – a common business practice involving the estimation of a company’s future finances – as key for any business.

“Following the spring lockdown, we knew that businesses needed to assess staffing levels, customer demand, inventory and other factors. ATB was able to help our customers build a deep understanding of cash flow, which has helped them make better, more informed, decisions.”

In addition to helping businesses access funding, Horsman explains the advisory role of banks in helping business owners navigate financial downturn and tough economic climates.

“We know what a tough time it has been for a lot of people—and their businesses—and we have been doing what we can to help. Throughout the pandemic, our team has been reaching out to businesses to check on their financial health, offering the resources, advice and support they need to move forward, and helping them pivot where necessary,” he says. “We have had business owners who thought they were going to have to close down but after sitting down and working through cash flow projections and other details with their relationship manager, they were able to turn things around enough to find opportunities in the current economic environment.”

With financial assistance programs introduced by the federal government such as the Business Credit Availability Program (BCAP), mid-sized businesses have access to supports aimed at making the COVID-19 economic waters less turbulent. As explained by Michael Selci, senior vice president for the prairies division of Business Development Bank of Canada (BDC), there are extensive programs in place for businesses needing an additional financial crutch.

“A number of measures, in addition to access to credit, have been put in place through the Government of Canada’s Economic Response Plan to help businesses through these trying times,” Selci notes. “The Mid‐Market Financing Program, which is an extension on the Government of Canada’s BCAP, was specifically created for mid‐sized businesses from all industries, including oil and gas. This program aims to bring liquidity to medium‐sized companies particularly impacted by COVID‐19, whose credit needs exceed what is already available through the Government of Canada’s BCAP program and other relief measures.

He continues, “Interested medium‐sized business owners are encouraged to speak with their primary lender who can assess if the program is appropriate for them. The primary lender will then communicate with BDC regarding next steps.”

Medium-sized companies further have the option to apply for the Export Development Canada (EDC) Mid‐Market Guarantee, an expanded program offering up to an additional $80 million for eligible businesses.

With consideration to a sluggish economy and the need for businesses to adapt to an uncertain financial environment, a number of businesses have chosen to remedy their financial ailments by accessing loan programs. For those preparing loan applications, Selci shares some common mistakes businesses make when evaluating their options.

“When looking for a business loan, a common mistake is to strictly focus on the interest rate at the expense of other factors. While the interest rate is important, it’s not the only criteria that matters when choosing a business loan,” he notes. “I recommend looking at the loan term, the loan size, the flexibility on repayments, the financial reporting the bank is requiring and the guarantees that are being requested of you in case of default. With all the information on hand, you will be able to make a better decision for your business.”

For many businesses in the province, the road ahead has no shortage of potholes; however, careful planning and consultation with financial experts can lay the foundation for a robust financial strategy.

“In difficult times like this one, the way ahead isn’t always clear. Many people know BDC for the financing we provide, but not everybody is aware of our advisory services practice. Our advisors understand the realities of running a business and have helped entrepreneurs for over 75 years pull through challenging periods,” Selci says. “Entrepreneurs in Alberta have been hit hard by the dual shock of the COVID-19 pandemic and a sharp drop in oil prices. Our reports tell us that diversification, including opening new markets and launching new products, should be a key objective in a business’ strategic plan. By securing a variety of sources of revenue and profit, you will have a company that not only grows faster when times are good, but is also more resilient when they turn bad. Further, by combining your diversification strategy with tech investment, you can help maximize profit.”

As shared by the banking experts, navigating finances during a pandemic is no easy feat, but the process becomes a lot easier (and effective) when companies reach out for guidance from those who understand a fluctuating economy best.