MONDAY,OCTOBER21,2019 | THEGLOBEANDMAIL O ENTREPRENEURSHIP B3
Y
ears ago, Google search-re-
sult pages were simple. Web
searchers would type in a
query and their results would in-
clude a few ads at the top of the
page, followed by 10 unpaid links
to websites that Google believed
to be most relevant to what they
were searching for.
Google’s algorithm steadily
improved, making better match-
es between search queries and re-
sults. This attracted more search-
ers, which in turn attracted more
advertisers. It was a win-win-win
scenario. Searchers found what
they wanted, website owners re-
ceived quality traffic to their web-
sites and Google got paid (upon
ad clicks).
Google search is now a com-
plex landscape, with many more
potential sections appearing in a
search-engine result page (SERP).
Besides the ads at the top and the
10 organic results at the bottom, a
Google search could return re-
sults from Google Images, Google
Maps, YouTube, Google News,
Google Travel, weather, sports,
social media and Q&A boxes, all
competing for space inside the
SERP. This has led to the rise of
two things: more clicks going to
Google-related properties and
more web searches resulting in
no clicks at all.
It’s clear who’s winning in this
scenario: website searchers and
Alphabet, Google’s parent com-
pany.
Searchers, particularly those
on mobile devices, can now get
faster results to what they’re look-
ing for. They no longer have to
click through to websites to go
hunting for information – they
can find answers right inside Goo-
gle. An estimated 49 per cent of
Google searches in the United
States in the first quarter of 2019
resulted in no clicks at all.
Google itself is also winning,with an estimated 6 per cent of
search results in the same time
going to Alphabet-owned proper-
ties. It’s one of the reasons why 50
U.S. states have launched a joint
antitrust probe into Google.
But website owners are no
longer winning. It’s estimated
that Google sent 20 per cent fewer
organic clicks from web-browser
searches to websites in 2019 than- How can a small business be
seen, found and get clicks to their
website in this new ecosystem,
short of buying Google Ads?
Toronto-based search-engine
optimization consultant Paul Tei-
telman says the answer lies in the
content structure of a business’s
website. “It’s about understand-
ing what type of formatting that
Google is showcasing,” Mr. Teitel-
man says. “Once you understand
what they’re looking for, you can
restructure your own content to
respond to that.”
One area that small businesses
can appear in Google SERPs is in-
side Google Maps and Google
Business listings.
Businesses can create a free
listing and submit a company de-
scription, location, interior and
exterior photos, hours of oper-
ation and other details. Having a
complete Google Business listing
will increase the visibility of an
organization in local search re-
sults and in Google Maps.
Another prominent piece of
Google SERP real estate that a
small business may be able to
claim is the “featured snippet”
box, also known as an “answer
box.” It’s the area of a Google
search that sometimes appears
before the 10 organic search re-
sults, when a search takes the
form of a question.
The featured snippet box dis-
plays the question and an excerpt
from a website that Google be-
lieves best answers the question.
These Q&A boxes include a link
to the source website. An experi-
ment performed by marketing
software company HubSpot sug-
gests that the likelihood of receiv-
ing a click is two times higher in a
featured snippet box than in or-
ganic search results. That could
make a big difference to a smallbusiness.
To try to appear in featured
snippet boxes, website owners
should present website content
in structured sections. Headings,
subheadings and lists are key. In-
clude questions in headings, fol-
lowed by the answer to that ques-
tion in a paragraph or a list. That
way, Google is more likely to dis-
play an excerpt from the website
in a featured snippet box when a
searcher makes a similar query.
Optimizing website content for
featured snippet boxes doesn’t
mean website owners need to
overhaul their sites. Existing con-
tent can be repurposed to be
more search friendly, as long as
it’s quality content that provides
value to website visitors.
“The opportunity to refresh ex-
isting content has never been
stronger,” Mr. Teitelman says.
Revamping website content
for featured snippet boxes has an-
other possible benefit: It can im-
prove the likelihood of appearing
in voice search results, which of-
ten take a Q&A format.
Consistent change within Goo-
gle is all but guaranteed, and it
can be difficult for a small busi-
ness to keep up. While organic
search will never disappear, it will
likely continue to change in for-
mat. As search evolves, business-
es that adapt their digital content
strategy to take advantage of ev-
ery opportunity for visibility will
thrive.SpecialtoTheGlobeandMailSmallbusinessesgrapplewiththedeclineofGoogle’sorganicsearch
AVERYSWARTZ
AuthorofSeeYouontheInternet:
BuildingYourSmallBusinesswith
DigitalMarketing(comingMarch,
2020).Sheisalsothefounderof
techtrainingcompanyCampTech.
About6percentofsearchresultsonGoogle,whoselogoisseenata
startupconferenceinParisinMay,leadtopropertiesownedbyAlphabet,
thesearchengine’sparentcompany.CHARLESPLATIAU/REUTERSCanadian small-business owners seeking capital will soon
have another alternative-financing option, as PayPal Busi-
ness Loan launches in Canada.
Paul Parisi, president of PayPal Canada, says as business
owners face issues securing financing from traditional banks,
PayPal saw an opportunity to enter Canada’s growing alterna-
tive-lending market.
“The concept of us being able to help our smaller mer-
chants get money fast and cheap and efficiently, with a known
cost to them, has proven to be very valuable to our customer
base in other parts of the world,” Mr. Parisi says.
Starting Oct. 21, loans of $5,000 to $100,000 are available by
invitation to select Canadian PayPal merchants. Early next
year, all PayPal business-account holders who have been with
PayPal for at least three months can apply for loans. The com-
pany’s business loans are already available in five countries.
To get a loan, business owners fill out an online form. As
applicants are existing PayPal
merchants, Mr. Parisi says the
company “knows who they are”
and what’s happening in their
business, meaning a lending deci-
sion is given in minutes. If ap-
proved for financing, funds are
transferred to the business’s bank
account in one to two business
days.
The loan is repaid through
weekly payments, with the term
ranging from 13 to 52 weeks.
While traditional lenders typically charge interest based on
an annual rate, PayPal charges borrowers a single, fixed fee
that ranges from 6.5 per cent to 19 per cent of the loan amount.
PayPal says that fee ranges depending on the risk profile of the
applicant, the loan amount and the length of the loan.
Based on loans given during a pilot of the product, the aver-
age fee was 15 per cent. PayPal expects that fee to go down as
more loans are disbursed.
Michael King, Lansdowne Chair in Finance at the Universi-
ty of Victoria, says it’s a natural extension for companies like
PayPal to start offering lending products. “It’s quite attractive
for both sides, because it allows PayPal to offer another ser-
vice to their customers to make them more loyal and sticky,
and for the small business, it gives them a source of financing
that otherwise wouldn’t be available,” he says.
PayPal has “a different window” into businesses than tradi-
tional lenders, Mr. King says, meaning small businesses that
struggle to access bank financing could be approved by Pay-
Pal.
Mr. King expects other payment companies to also move
into Canada’s small-business lending space. In the United
States, Shopify, Stripe and Square have all recently launched
financing products for entrepreneurs.
“Small businesses will benefit from having a greater supply
coming from different alternative sources, and particularly
from companies where they already have a business relation-
ship,” he says. “There’s quite a bit of excess demand relative to
the amount of loans that are available.”SpecialtoTheGlobeandMailStartingonMonday,PayPal–theGermanheadquartersof
whichareseeninKleinmachnow–willmakeloansofup
to$100,000availabletoselectCanadianPayPalmerchants.
FABRIZIOBENSCH/REUTERSPaypal’ssmall-business
loanprogramlaunches
inCanada
CAILYNNKLINGBEILEarlynextyear,
allPayPal
business-account
holderswhohave
beenwithPayPal
foratleastthree
monthscanapply
forloans.W
hen David Gens started
his financing company
Merchant Growth 10
years ago, merchant cash ad-
vances were not a well-known
product in Canada.
A small business uses a mer-
chant cash advance to receive
capital now, and pays it off as a
percentage of future debit and
credit card sales. Unlike a loan
with a fixed term, the repayment
time can vary depending on the
sales of the business.
Mr. Gens, who was working in
the investment industry, saw
that merchant cash advances
were growing in popularity in
the United States. With few Cana-
dian companies offering the
product, he decided to start his
own business, Merchant Ad-
vance Capital.
The Vancouver-based compa-
ny – recently rebranded as Mer-
chant Growth – has gone on to
advance more than $250-million
to more than 4,500 businesses.
“I’m never going to be the
cheapest provider of credit, be-
cause the banks have an inher-
ent advantage in terms of their
cost of funds,” Mr. Gens says.
“But I can be the most conve-
nient source for financing for
small business, and that’s the vi-
sion I’ve rallied the company
around.”
THE PROMISE
Merchant Growth offers small-
business owners two types of
merchant cash advance prod-
ucts, as well as business lines of
credit. One merchant cash ad-
vance product, called Flex Solu-
tion, is repaid on a daily basis,
based on a fixed percentage of
each day’s debit and credit card
sales, ranging between 4 per cent
and 15 per cent.
The other merchant cash ad-
vance product, Fixed Solution,
strays from the usual cash-ad-
vance model and involves repay-
ing a fixed daily or weekly
amount, rather than a percent-
age of sales.
“This product allowed us to
extend credit to businesses that
don’t actually have built-in credit
card sales,” Mr. Gens says. “Then
as we started offering it, we
found that some business own-
ers just prefer knowing exactly
what’s coming out of the ac-
count each week.”
With both products, the
amount of the cash advance
ranges from $5,000 to $500,000.
Mr. Gens says the average
amount is about $40,000. The
average term is estimated at 12
months, but for the Flex Solu-
tion, that number can vary de-
pending on sales at the business.
For both products, businesses
with minimum average monthly
sales of $10,000 and a minimum
of six months in business are eli-
gible. Merchant Growth takes in-
to account personal and business
credit ratings and business bank
statements.
Of the small-business owners
who apply to Merchant Growth,
between 65 per cent and 70 per
cent are approved for funding,
Mr. Gens says.THE EXPERIENCE
Does Merchant Growth live up to
its claims? A small-business own-
er who has used the Flex product
three times shared his experi-
ence with The Globe and Mail.
Carlos Taylhardat, chief exec-
utive of Art of Headshots, a Van-
couver-based photography com-
pany with seven locations across
Canada, first used a merchant
cash advance from Merchant
Growth in 2016.Before applying to Merchant,
Mr. Taylhardat says he looked in-
to financing options through
banks. But because he does not
own a house, he says he had
trouble securing a loan.
“If you don’t have equity, basi-
cally if they can’t take something
from you, they’re not going to
lend you money,” he says. “It’s
very hard as a business owner to
be able to borrow money.”
Merchant Growth lends mon-
ey differently than banks, Mr.
Taylhardat says. He filled out a
simple online application and
heard back quickly, receiving
money within a few days.
Mr. Gens says, on average, it
takes about four days from a
completed application to cash in
the client’s account, although
same-day financing does happen
regularly.
Mr. Taylhardat adds the rate to
borrow is higher than a bank
loan and the term is shorter, but
in his experience, the product
worked well for him and the
process was transparent.PAYBACK TIME
Determining how much a busi-
ness will pay for an advance is
based on many factors. “We’ve
taken a whole bunch of applica-
tion data, raw bank data, creditbureau data – and our statistical
score comes up with what the
risk is for that account,” Mr. Gens
says.
Instead of an annual percent-
age rate, a typical way of express-
ing interest on a term loan, Mer-
chant Growth uses a factor rate
on its products.
With an annual percentage
rate, the repayments reduce the
principal on which the interest is
calculated. With Merchant
Growth, the amount to be repaid
is the original loan amount mul-
tiplied by the factor rate. Borrow-
ing $100,000 at a factor rate of
1.20 over 12 months, for example,
means the business owner will
repay $120,000.
Mr. Gens says Merchant
Growth’s factor rate ranges from
1.13 to 1.28 for a 12-month prod-
uct. A six- or nine-month prod-
uct will have a lower factor-rate
range, and a product lasting
more than 15 months will have a
higher range. Mr. Gens says there
is no additional origination fee.THE BOTTOM LINE
Andrew Zakharia, a small-busi-
ness accountant and founder of
AZ Accounting Firm in Toronto,
says while Merchant Growth pro-
vides business owners with fast
access to capital, business own-
ers need to know the risk and
what they’re signing up for.
“Don’t use it as a lifeline for
your business,” Mr. Zakharia
says, adding that the high cost to
borrow means a business already
short on cash could face even
larger cash-flow issues.
He cautions that borrowers
need to understand how daily or
weekly payments will affect their
business, and says the flex prod-
uct can be even more difficult to
forecast because the daily or
weekly repayment amount is not
fixed.
“With a traditional loan, you
might have three or five years to
repay, so it doesn’t really affect
your cash flow that much.
There’s a long-time horizon to
turn your business around,” he
says. “[A merchant cash ad-
vance] really only should be
used by somebody that knows,
100 per cent, that in six months
to a year, their situation is going
to change a lot.”
Mr. Gens says while Merchant
Growth’s products are shorter
term than traditional options,
they’re sized appropriately based
on what a business can afford.
He adds it’s important for a busi-
ness to track its financing pay-
ments as a percentage of reve-
nue.
“While keeping this pay-
ments-to-revenue percentage
low limits the amount that a
business qualifies for with us, we
do not want to overburden a
business with more credit than it
is able to comfortably repay from
cash flow,” he says.Special to The Globe and MailAreMerchantGrowth’s
loansworththecost?
Thecreditprovider
promisesconvenient
cashadvances,but
businessownersneedto
besuretheyunderstand
therisksinvolved
CAILYNNKLINGBEIL
Thisproductallowed
ustoextendcredit
tobusinessesthat
don’tactuallyhave
built-increditcardsales.DAVIDGENS
FOUNDEROF
MERCHANTGROWTH