How Novo Built B2B
Multi-Credit on Canopy
As a flexible, modern banking tool designed to help small businesses grow, the team at Novo is no stranger to taking a traditional banking concept and digitizing it from end-to-end.
Launching B2B Multi-Credit
A trusted partner for over 200,000 small businesses throughout the United States and recipient of the 2023 Forbes Fintech 50, Novo provides faster cash flow and clear financial insights without monthly fees or minimum balance requirements. The Novo platform also has connections to thousands of business apps, such as Stripe, Square, Shopify, and Gusto.
In October 2022, they began piloting a new hybrid, multi-draw product offering, using Canopy as their credit portfolio servicing platform.
How Novo Got its Start
Novo was founded in 2016 with a mission to empower business owners with their financial data through a modern approach to checking accounts. Built for today’s business owners, their roots lie in helping freelancers, startup founders, and small business owners open checking accounts within minutes, securely and easily without minimum balance requirements.
“We focus on making the lives of our small business customers easier. These people are not financiers, they’re not bankers. They’re ballet teachers, they’re auto mechanics, they’re lawyers. Our goal is to reduce the amount of time they have to spend managing the financial affairs of their business.”
Since its inception, Novo banking customers have been able to simplify their business finances with capabilities & features like:
Depositing and sending checks via the mobile app
Real-time insights and an overview of their finances
A virtual debit card to make payments right away
Unlimited transactions and fast, easy transfers
Near instant access to Stripe payments through Novo Boost
Building a New Multi-Draw Product
Throughout senior leadership’s many years in merchant lending, they’ve learned a lot about what business owners actually need. As a result, Novo provides working capital on an as-needed basis, allowing their customers to repay when they’re able.
“Most small businesses don’t need 5+ year loans. Most of the time, what they need is working capital, and it’s episodic. It’s not like they can plan that one of their customers is going to be late paying them, yet they still have to pay their bills. It was understanding these needs that allowed us to create our somewhat unique [lending] structure.”
EVP & GM, Novo
What Are the Risks of Extending Credit to Small Businesses?
Providing credit to small businesses is risky, which is why most banks don’t offer loans and credit to smaller businesses, such as the ones Novo operates with. Unlike traditional banks, though, Novo takes a different approach by pricing in the risk.
For instance, if a customer goes delinquent, Novo has the information and data to direct their decision-making process in order to do the right thing for both the customer and their own organization, adding a layer of built-in safety with their product.
Why Novo Chose Canopy as its
Credit Portfolio Servicing Partner
After seeing a number of lending core providers over his 15 years in business lending, Novo’s EVP of Credit approached Canopy once the time came to select its servicing partner.
As one of the newer financial technology providers in the lending industry, Canopy became one of the leading candidates for what Novo was trying to build next.
They went through a deep dive process in order to vet a platform that could support their unique product offering. Furthermore, they were looking for a supportive team that they wanted to partner with, which is what ultimately drove their decision to work with Canopy.
“We worked with Canopy to configure our solution and make it publicly available. They provide us with the information so we can service our portfolio, as well provide that information to our customers so they can understand their financial situation vis-à-vis what they have drawn.”
EVP & GM, Novo
How Novo Uses Canopy
Novo relies on Canopy as their ledger and system of record (SOR) for all transactions. Some of the specific features they use within their Canopy servicing account include:
Managing Rich Data
DataDirect, a core feature of Canopy, ingests general ledger data for audit purposes, record keeping, reporting, and reconciliation for Novo banking customers.
API & Webhooks
Using their own customer facing portal, Novo uses Canopy API and webhooks to populate information and monitor customer activity.
Novo also uses Canopy’s Multi-Advance product to give their customers more flexible options. This allows customers to take multiple draws against their Novo line of credit while synchronizing payments to a single date.
*Novo Platform Inc. (“Novo”) is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A. Member FDIC.Merchant Cash Advance products and services are offered by Novo Funding LLC (“Novo Funding”), a wholly owned subsidiary of Novo.