iwoca, one of Europe’s largest business lenders, has been awarded £10 million from the Capability and Innovation Fund (CIF), announced by Banking Competition Remedies Ltd (BCR). The funding is one of four £10 million Pool C grants awarded with the aim of helping businesses improve lending or payment services to SMEs across the UK.

The grant will be key to expanding iwoca’s customer base to 150,000 and making £5 billion available to support Britain’s SMEs. Since iwoca’s launch in 2012, the small business lender has already made funding available to 35,000 businesses in the UK, raised £350 million in equity and debt finance as well as achieving a series of industry firsts such as launching a Lending API. In 2018, iwoca doubled its revenues to £48 million and reached profitability.

New products and partnerships

The BCR award gives iwoca a unique opportunity to address the £10 billion funding gap for small businesses that is caused by a lack of relevant finance and difficulty accessing finance. iwoca will make finance more accessible through the introduction of OpenLending, a customisable self-serve “plug & play” platform for a growing number of SME Fintech partners.

Another key part of iwoca’s commitment to OpenLending is a new partnership with Xero, the UK’s leading online accounting platform. The BCR grant will enable iwoca and Xero to collaborate to find innovative solutions for small business financing problems – making iwoca’s finance more accessible to Xero’s 450,000+ UK subscribers.

With the funding from BCR, iwoca is also committing to bringing new, more tailored, financial products to small businesses. iwoca will focus on providing a more flexible lending structure by introducing a No PG loan, an SME loan that doesn’t require a personal guarantee. The small business lender will also bring finance to where business owners need it most – at the point of invoice – by launching iwocaPay, and in doing so will help solve the problem of late payments. iwocaPay will fund both sides of the invoice (buyer and seller), allowing the option to extend flexible payment terms to buyers while ensuring prompt payments.

Matched funding

iwoca is also committing to add an additional £13 million on top of the £10 million CIF grant, creating a total investment of £23 million. The grant will enable iwoca to open a regional office with at least 50 staff outside of London. Full details of iwoca’s six public commitments can be found on the CIF public commitments page.

“Winning this grant is a huge milestone for us,” said Christoph Rieche, iwoca’s CEO and co-founder. “We’re confident that we’ll be delivering on our commitment to make £5 billion available to 150,000 SMEs by 2023. iwoca is the only SME lender in the UK with the scale, level of experience and technology to dramatically expand and transform access to finance for small businesses. Our proven track record of industry firsts includes integrating with eBay and Amazon, being the first business to offer a Lending API, and the first SME lender to integrate with OpenBanking. Winning the grant enables us to accelerate our mission to make finance available to one million SMEs.”

Edward Berks, Business Platform Director at Xero added:

“The UK is one of the easiest places in the world to start a business, but not enough is done to help them grow. Boosting the UK's productivity means helping small businesses access finance to fund growth. It also means addressing the late payment epidemic which ties up working capital and stifles innovation. So I'm very excited that we'll be accelerating our partnership with iwoca to work together on new SME credit propositions. Small businesses deserve better access to funds.”