VersaBank, a London, Ontario-based digital bank, has expanded its Structured Receivable Program (SRP) in the United States to finance point-of-sale loans and leases for small businesses. The expansion introduces the bank’s established small business funding capabilities to the U.S. market, where its SRP activities had previously focused exclusively on consumer lending.
The initiative includes VersaBank’s Real-Time Structured Receivable Program, which enables financing companies to obtain funding for individual loans within hours rather than accumulating receivables over several days or weeks.
VersaBank estimates that adding small business lending and leasing will more than double the addressable market for its U.S. Structured Receivable Program. The expansion is intended to support the bank’s target of generating at least US$3 billion in additional U.S. SRP fundings in 2027. This figure represents management’s target rather than funding already committed or completed.
The launch represents another step in VersaBank’s efforts to expand its U.S. operations following the introduction of its Structured Receivable Program to the American market in August 2024.
VersaBank has offered its SRP to the Canadian small business sector since 2010, providing financing to companies that originate loans and leases for commercial customers.
The U.S. expansion will allow the bank to establish relationships with financing companies specializing in small business transactions while enabling its existing U.S. partners to obtain funding for additional loan categories.
According to VersaBank, the company has already developed a substantial pipeline of prospective U.S. SRP partners in anticipation of the launch.
Its Structured Receivable Program provides capital to financing companies that originate loans for consumers and small businesses, particularly for relatively large purchases.
These transactions can include consumer home improvement projects, heating and air conditioning equipment, and a broad range of commercial equipment purchased or leased by small businesses.
Rather than originating every underlying loan directly, VersaBank works with financing partners that maintain customer relationships and originate eligible receivables.
The program is designed to provide those partners with consistent access to funding, enabling them to originate additional loans while managing their capital requirements.
For small business financing companies, reliable access to capital can be particularly important when supporting customers making substantial equipment purchases or investments in their operations.
VersaBank’s expansion will allow qualifying U.S. partners to use its funding platform for these transactions, extending the types of receivables eligible for financing.
A central component of the strategy is the bank’s Real-Time SRP, which was developed to accelerate the funding process for point-of-sale lenders.
Under conventional receivables financing arrangements, lenders may need to accumulate multiple loans before transferring them into a warehouse financing facility or arranging longer-term funding.
According to VersaBank, this process typically requires five to 30 days or longer, potentially increasing financing costs and the amount of capital lenders need to maintain.
The Real-Time SRP is designed to eliminate much of that waiting period by allowing participating lenders to obtain funding for individual loans within hours.
By reducing the need to warehouse receivables before obtaining funding, the platform can help financing companies lower their financing expenses and reduce their reliance on separate warehouse credit facilities.
The technology also allows VersaBank to assess the underlying loans individually, rather than relying exclusively on evaluations of larger pools of receivables.
The bank plans to apply its proprietary internal AI platform to evaluate individual loans underlying SRP receivables, strengthening its ability to assess and manage financing risks.
For VersaBank, the expansion creates opportunities to increase business with existing financing partners while establishing relationships with additional lenders that specialize in commercial equipment and other small business financing.
The bank expects its experience in the Canadian small business market to support the U.S. rollout, although the scale and timing of additional funding will depend on partner adoption and loan origination activity.
VersaBank operates a branchless, digital, business-to-business banking model supported by proprietary technology.
Federally chartered in both Canada and the United States, the bank obtains substantially all its deposits and conducts most of its funding activities electronically through financial intermediary partners.
This operating model is designed to serve specialized banking markets without maintaining a conventional retail branch network.
Beyond its lending activities, VersaBank owns Minnesota-based DRT Cyber, which provides cybersecurity services to financial institutions, multinational corporations, and government organizations.
Through DRT Cyber, the bank also owns technology supporting digital asset applications, including its proprietary Real Bank Tokenized Deposits.
The small business SRP launch adds another growth opportunity within VersaBank’s core digital banking operations as it continues expanding its U.S. financing activities.
KEY QUOTE:
“We estimate that making our SRP available to partners for the funding of small business loans and leases more than doubles the size of our market opportunity in the U.S., addressing a need within our current SRP partners, while enabling us to add new partners, all of which supports our target to generate at least US$3 billion in additional U.S. SRP fundings next year.”
David Taylor, Founder and President of VersaBank
