London-headquartered iwoca, one of largest SME lenders, has secured a new debt facility with initial commitments of £200 million. The investment came from Barclays known for investing in TP24, Liberis and WeFox, and Värde Partners.
This follows the extension funding it secured from partner Pollen Street Capital from £125 million to £170 million earlier this year. With the fresh funding, the total debt commitments secured by iwoca accounts for over £850 million.
Enables access to capital for SMEs
As the UK’s high street lenders retrench, reducing access to capital for SMEs, this fundraising allows iwoca to meet growing SME demand for working capital. As per iwoca’s Q2/23 SME Expert Index, nearly 84% SMEs claim high street banks are reducing their appetite for funding SMEs. This increased by 7% points since Q1 2023.
Likewise, nearly 81% SME finance experts predict demand for finance for SMEs will increase by the end of the year, indicating that the funding gap for SMEs is set to widen without support from alternative lenders.
Businesses can directly access loans
Founded in 2011 by Christoph Rieche and James Dear in London, iwoca has lent over £2.5 billion across the UK and Germany via over 120,000 business loans. As of Q3 2023, the lender is on track to end the year having doubled the number of small business loans it has funded when compared to 2021.
Currently, iwoca’s top-funded sectors include construction, retail (11%), and manufacturing & food production.
iwoca is reaching almost 3 million businesses across the UK and Germany through its embedded lending technology. This allows businesses to access loans directly through a range of platforms such as accountancy software apps and digital neo-banks. In addition to its Flexi-Loan, the lender offers an omni-channel B2B payment solution, iwocaPay, and a Revenue-Based Loan, which it launched with eBay in 2022. The repayments of these solutions are a percentage of a business’s monthly sales.
Christoph Rieche, iwoca CEO and co-founder, said: “We started iwoca after the financial crisis to offer SMEs the support that was so badly needed during uncertain times. Now, over 10 years later, we are fully tested and have proven that we can be there for SMEs when they need us the most. With this new funding, we’re in an even better position to help smaller businesses in the UK and Germany at a time of economic uncertainty. These SME businesses form the basis of a strong economy, and iwoca will lead from the front to help them thrive and achieve their goals.”
“We are pleased to support the expansion of commercial financing opportunities in the UK through iwoca,” said Aneek Mamik, Global Head of Financial Services & Diversified Private Credit at Värde Partners. “iwoca’s differentiated sourcing and underwriting capabilities give us access to a high quality portfolio of commercial businesses. This builds on our leading position in providing commercial lending and leasing solutions to parts of the economy increasingly underserved as banks are less able to meet the full spectrum of the demand.”
