SME lender iwoca secures £270m from Citi and Barclays

By Bridging Loan Directory 7th May 2024

iwoca, one of Europe’s largest SME lenders, today announces a new £270m package of debt funding, taking total gross investment in the company to over £1bn since it was founded in 2012.

iwoca has received £150m (€175m) in debt financing commitments from Citibank and Insight Investment to support the company’s growth in Germany, and a further £120m from Barclays and Värde for the UK business, as it responds to mounting demand for finance from small businesses.

The new investment follows £200m in funding from Barclays and Värde Partners in October last year, and £170m from Pollen Street Capital in January 2023.

New lending record and £3bn in loans to small businesses

Since its launch in 2012, iwoca has provided £3bn in loans to SMEs in need of working capital in the UK and Germany.

The company has already broken its record for the volume of loans issued in the first quarter of this year, with over £200m lent across 9,000 business loans in the UK and Germany from January to March 2024.

iwoca has been growing its share of the lending market through embedded finance technology and increasing its number of partners — allowing businesses to access loans directly through a range of platforms including Qonto and Countingup.

Bridging the SME funding gap

iwoca’s increased funding comes as data shows more high street banks are reducing their funding to small and medium-sized businesses.

iwoca’s latest SME Expert Index finds that three-quarters (76%) of brokers report that high street banks are reducing their appetite for funding SMEs, while nearly nine in ten (86%) expect demand for finance to increase over the next six months.

The British Business Bank’s 2024 annual report on Small Business Finance Markets also finds that specialist and challenger lenders’ share of total gross lending reached a record high last year, now accounting for three-fifths (59%) of the market.

Christoph Rieche, iwoca CEO and co-founder said:

“This investment will enable us to keep up with the high demand from small businesses for our Flexi-Loan product.

Business owners choose us over high-street banks because we make faster lending decisions, typically within 24 hours, and our loan terms are much more flexible.

Both of these features are crucial for small business owners, and are only possible due to the technology we have developed over the last decade.

With more than 130,000 small business loans processed, we have ample data to build market-leading risk models.

This data-driven approach also allows us to lend to businesses that are outside the restrictions imposed by the high-street banks, especially when they don’t have multiple years of trading.”