It’s no secret that access to capital is the lifeblood of any business, but what happens when the financial ecosystem tightens, and traditional sources begin to dry up? That’s the lending crunch challenge that many North American businesses are facing today. As banks tighten credit criteria and regulatory oversight intensifies, companies across the U.S. and Canada are finding themselves caught between robust growth opportunities and a frustrating lack of accessible funding to support that growth.

At Sallyport Commercial Finance, we’re having more conversations than ever with business owners and advisors who are searching for answers, and alternatives. In this insight, we’ll explore what’s causing the current lending pullback, how it’s impacting small and mid-sized enterprises (SMEs), and what steps businesses can take to remain competitive and solvent in a more challenging financing environment.

The Lending Landscape: Why It’s Changing

The lending climate has undergone a significant shift over the past 18 months, and it shows no signs of reversing soon. There are several driving factors at play:

1. Higher Interest Rates

The Federal Reserve’s rapid interest rate hikes, designed to combat inflation, have not only increased the cost of borrowing but have also made banks more cautious about extending credit. In Canada, the Bank of Canada has followed a similar pattern, with several rate increases contributing to tightening monetary conditions.

2. Regulatory Scrutiny

After the collapse of a few regional U.S. banks in early 2023, regulators have applied more pressure on financial institutions to ensure capital adequacy and risk management. This scrutiny has led banks to reduce their exposure, particularly to industries perceived as higher-risk such as transportation, retail, and construction.

3. Shifting Bank Priorities

Banks, particularly larger institutions, have increasingly favored larger, lower-risk clients. That leaves many SMEs—especially those in growth mode or those that are newer, foreign-owned, or in emerging sectors—scrambling for support.

Who’s Feeling the Pressure?

While all businesses are being asked to demonstrate stronger fundamentals, the impact of these tighter credit conditions isn’t felt equally across the board.

SMEs in Growth Mode

The irony? Many of the businesses most in need of working capital are the ones growing the fastest. Whether it’s a Canadian agriculture company expanding into U.S. markets or a U.S.-based staffing firm doubling headcount to meet client demand, growth requires liquidity – and fast.

Cross-Border Companies

Many traditional lenders are constrained by geography or ownership. U.S.-based banks often can’t—or won’t—fund Canadian entities, particularly if there’s foreign ownership involved. And the same applies in reverse. This leaves businesses operating across borders facing even more friction and fewer options.

Startups and Younger Enterprises

Despite having innovative ideas and strong leadership, startups without a long financial track record are often passed over by conventional lenders. These businesses often need non-dilutive funding that can grow with them both fast and flexibly.

The Ripple Effects of Limited Lending

When access to traditional lending contracts, it triggers a domino effect that can hinder operations and growth:

• Delayed Hiring and Expansion: Businesses can’t meet payroll or invest in new equipment or locations.

• Strained Supplier Relationships: Without enough working capital, companies can’t take advantage of volume discounts or pay suppliers on time.

• Lost Revenue Opportunities: When you can’t say yes to a new contract or client because of cash flow constraints, your growth stalls and your reputation can suffer.

These aren’t just hypotheticals. We’ve seen it firsthand at Sallyport. From businesses needing fast capital for payroll to tech companies on the cusp of IPOs that require custom facilities to support inventory and receivables, the need for alternative funding has never been greater.

Why Flexible Funding is the Solution

If there’s one thing this market shift has proven, it’s the critical role that alternative lenders like Sallyport play in supporting the real economy. We don’t just offer capital, we offer creativity, speed, and tailored support when it matters most.

Accounts Receivable Financing

A core solution for many businesses we support, Accounts Receivable financing unlocks the value tied up in outstanding invoices. It provides immediate working capital to help companies bridge the cash flow gap between delivering goods and services and getting paid.

Cross-Border Capabilities

Unlike many U.S. funders, we support Canadian businesses, including those with foreign ownership and help U.S. businesses with Canadian operations. Our cross-border capabilities remove common financing roadblocks and allow for seamless growth across North America.

Customized Facilities

At Sallyport, no two deals are the same. Whether it’s combining inventory and receivables financing or structuring a facility to work alongside an existing lender, we take the time to understand your business and build a solution that fits.

Real-World Examples from our Q2 Deals

In Q2 alone, we saw a diverse mix of businesses overcome financing roadblocks thanks to our flexible funding solutions:

✅ $5.5M for a UK-owned EdTech business expanding across North America.

✅ $1M to a Canadian Agriculture business whose U.S. lender couldn’t facilitate cross-border funding.

✅ $1M factoring facility for an AI-powered Distribution & Warehousing firm.

✅ $500K A/R Finance to support a growing Canadian Staffing company.

✅ $250K for a U.S.-based IT and Technical Staffing business scaling toward $1M+ revenue in 2026.

These aren’t just deals, they’re stories of real businesses gaining traction, creating jobs, and moving toward their vision with the right capital behind them.

What This Means for Advisors, CPAs and Commercial Bankers

If you’re working with clients affected by the current credit crunch, now’s the time to be proactive. Look for signs that a client may need help; slowing growth, delayed payroll, or concerns about supplier terms – and introduce them to alternative funding options early. Sallyport often works in tandem with banks or steps in temporarily until clients are ready to return to a traditional lending relationship.

What Businesses Should Do Now

Here are some steps to take if you’re concerned about your current or future access to funding:

1. Review Your Current Lending Agreements
   Understand your covenants, collateral arrangements, and potential triggers for a pullback.

2. Model Your Working Capital Needs
   If your payables are due before your receivables come in, it’s time to assess how long you can continue at your current cash flow pace.

3. Consider Alternative Financing Early
   Don’t wait until it’s too late. The earlier you engage with an alternative finance partner, the more options you’ll have.

4. Think Beyond Borders
   If you’re expanding into Canada or the U.S., make sure your funding partner can support you on both sides.

Looking Ahead: A Call to Action

The lending environment may be tighter, but that doesn’t mean your growth needs to slow. Whether you’re a staffing agency struggling to meet payroll, a distributor managing seasonal demand, or a tech company aiming for IPO—there are still funding options available.

At Sallyport Commercial Finance, we’ve built our business around one promise: to empower yours. We don’t just fund transactions, we support transformation. Our team is here to listen, tailor, and deliver fast, flexible capital when others can’t.

Need help navigating the current credit climate?

Let’s talk. We’re just a phone call, or a click away.