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the challenge

Michael Garrity, president and CEO of Community Lend Inc. and CEO of Finance It,Deborah Baic/The Globe and Mail

Every week, we will seek out expert advice to help a small or medium-sized company overcome a key issue it is facing in its business.

Michael Garrity is at a crossroads. He started one company that is going gangbusters while another one has been a drain.

Yet, he's not ready to give up on his labour of love.

Four years ago, Mr. Garrity formed CommunityLend Inc., a peer-to-peer lending service that connects borrowers looking for small loans with private investors via the Web.

The service, which went up in January of last year, is modelled after companies such as and, U.S. sites each processing about $25-million in loans a month.

CommunityLend, by contrast, is processing just under $25,000 – and Mr. Garrity says he's not seeing much in the way of growth.

Moreover, he knows it will take some heavy marketing dollars to build consumer trust and awareness for CommunityLend. As well, he's only licensed to lend in Ontario, Quebec and British Columbia, and needs funds to get regulatory approval for other provinces.

Even so, he's not ready to give up.

Ironically, as he looked into the financial industry, he discovered another opportunity to use the Web-based platform set up for CommunityLend, which cost $3-million to build, for another business.

That service, Finance It, run by a separate company also owned by CommunityLend Holdings Inc., was launched this past January. It teams up with merchants to offer consumers sales financing – point-of-purchase loans for retail purchases.

In under a year, Mr. Garrity and two salespeople have landed 600 retail partners. FinanceIt is now processing more than $3-million in loans a month, and enjoying monthly growth of 50 per cent, he says.

Now Mr. Garrity is wondering what to do with CommunityLend. \ Among his options, he is considering selling it. He's also looking into licensing his lending platform to a small bank or credit union. His third option is more long-term: to wait 18 months or so until FinanceIt has begun turning a profit and, through the holding company, use some of those funds to support CommunityLend.

But he wonders if he will ever really grow either enterprise if he puts one company's profits into the other.

Mr. Garrity still loves the idea of peer-to-peer lending, but doesn't want his passion to run both businesses into the ground.

The Challenge: What to do with CommunityLend?


Eric Bell-Bivar, financial industry expert and lawyer, partner in the Toronto's office of Davis LLP

I think CommunityLend could be very successful. But the branding is all wrong. There needs to be a real reason for borrowers and lenders to go here, and that's not sufficiently featured in their branding.

I think they could transfer profits from one company to another, but they need to put CommunityLend on a three-year business plan. Maybe hire some new management: someone younger, more in tune with the target market. When they are ready, put some money into the company but if it's not breaking even in 18 months, and profitable in 36, then put it up for sale.

Karen Fischer, principal of Whitby, Ont.-based consulting firm RK Fischer and Associates

There's no use in selling it: Nobody's going to buy a company that's not profitable. I think they need to hold onto it, but there are things they can do to make it more profitable without spending millions.

They need to hire a good marketing person to help them hone their message to better talk to their target market. They need to fix their website and include some case studies and testimonials. As well, one of the peer-to-peer lenders I looked at had a live person you could chat with: They could offer that service to help customer trust.

Licensing out to a credit union is a great idea. But the onus is still going to be on this company to help a credit union be successful. You have to help them build awareness because if they don't make money, you don't make money.

Rebecca Brown, founder of Toronto-based event planning and market company Bunch Family

Sinking all of the revenue from the lending side into the peer-to-peer side will hamper the growth of the profitable piece of their business and won't necessarily solve their problem, which is an issue of branding, awareness and trust.

CommunityLend should look for the right partner to lend credibility to their business. They might consider partnering with a trusted national charity and give a percentage of profits back to that charity. This would lend a lot of credibility and media attention. As well, they could partner with a company like, a free Web-based financial management tool, for cross-promotion and to share information on the demographics of customers who might be early adopters.



Put more effort into marketing, improving the company's branding message on its website, and making clearer its appeal to borrowers and lenders.

Build trust

Team up with a financial institution or a charity to benefit from the trustworthiness of a known brand name. Beef up the website, adding testimonials.

Create a long-term plan

Build a three-year plan for both companies, including milestones and holding off any decisions about selling.

Special to The Globe and Mail

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