Canam Credit Co. Inc. and its 22-year-old president and CEO, James White, have been making big moves in the private-lending arena since their arrival in the market in July 2006. Then, on May 10, Canam announced it would merge with Rogers Associate Financial Partners Inc.

“We wanted to grow,” says White. “RAFP is strong in the areas we want to expand into, and we could help them. It’s a win/win situation.”

RAFP’s president and major shareholder, John Rogers, agrees the merger will be beneficial, although the decision to join forces was sudden. “It was really spontaneous,” he says. “We connected through coincidence, and when I met James White, things just progressed.”

The May 10 deal is not entirely surprising. The two Calgary-based companies had earlier dealings. A week prior to the merger announcement, Canam bought Canada Debt Assistance & Canada Credit Services, a wholly owned subsidiary of RAFP, for $1.5 million. The credit counselling business made up 71% of RAFP’s revenue of $1.9 million in the third quarter ended Jan. 31.

“It’s always a great line of business, but it wasn’t the direction we wanted to go in,” says Rogers of the CDA sale. “We were going strong in the lending arena and looking to expand into the commercial mortgage lending market. We wanted to grow in a different direction.”

The sale of CDA followed flagging revenue and losses at RAFP in past fiscal years. The company instituted a recent cost-cutting campaign, which included salary cuts and reduced rents.

“We had to re-evaluate our business strategies,” says Rogers. “Every avenue was producing revenue, but not always effectively. We went back to the drawing board and micromanaged.”

The new strategy appears to have been successful. In the past nine months, the company had revenue of $1.9 million, vs $1.4 million in the whole of fiscal 2006 and $1.7 million in fiscal 2005. Losses in the third quarter were $114,327, vs $522,238 in the same quarter the year before.

It is hoped the amalgamation of RAFP and Canam will continue the improvement trend, while the nascent Canam will gain presence on the national stage.

The merger will be beneficial to both, according to Rogers: “Instead of running side by side, we can merge and grow exponentially.”

“By taking over everything, we can concentrate on making it more robust,” adds White.

The deal gives Canam an easy way to go public — RAFP trades on the TSX Venture Exchange — which will aid Canam in its continuing efforts to raise capital. Canam will also profit from RAFP’s experience.

Meanwhile, RAFP’s shareholders will be thankful for the money Canam can inject into the business and the liquidity it will provide, as well as for White’s boundless energy and attention.

Beyond expediting the growth of Canam and providing some shareholder security for the publicly traded RAFP, the merger will add new energy and vigour to RAFP.

White’s youth also brings the perspective of a computer-savvy generation. He wants to put the technological ease of his contemporaries to use, from instant shareholder communication to mobile loans through a PDA.

“I grew up using computers in elementary-school classrooms,” says White, whose blog could be accessed until recently from the Canam Web site. “We’re bridging a generational gap. John and I are very similar; we drive the same truck [considered a sign of great compatibility in Calgary]. But we bring different qualities to the table. With John’s experience and my energy, we can help a lot of people.”

Canam is not White’s first venture. He started his first business — a landscaping company — with $20 when he was 12, and sold it when he was 16. “My rule is: never start a company with more than $20 of your own money,” he jokes.

Canam is a privately owned company whose investors number in the hundreds. Requiring a minimum investment of only $5,000, White raised capital quickly and was able to put the money to work. He has raised more capital through two offering memoranda since.

“I didn’t grow up rich, and neither did my friends,” he says. “The minimum investment could have been more, but I knew the people investing were just regular people who trusted me. And I know I can make them money.”

@page_break@White believes having a group of this size behind him has been good for business, leaving him to do what’s best without worrying about the possibly negative reaction of one major shareholder. It has also created a community around the company, fostered by White’s open-door policy for investors, welcoming their ideas any time, and investor/executive team hikes every couple of weeks. As a result, White says, Canam shareholders refer their friends to the company. Indeed, Canam hasn’t needed to look, or compete, for clients.

“When you have that many people on your side,” says White, “when you have 250 people’s circles of influence, it becomes a marketing tool — you’re creating your own market.”

Canam offers services such as short-term loans, commission advances and receivables factoring, thus serving an “underbanked” sector of the population.

“We want to remember that they’re good, loyal people,” says White. “The kind of person who may not always pay their bills on time, but always pays them.”

The service goes further than doling out money. Canam — like CDA — stresses the importance of good money management, and each loan comes with counselling. If you help people, White says, they’ll stay for life.

The Canam/RAFP merger is indicative of the company’s future direction. It plans other acquisitions in areas that will support the RAFP business, such as the mortgage business. White also has plans to take its business of serving the underbanked to Africa and Asia, where microlending has already had a positive effect. IE