iwoca Secures £270m From Citi and Barclays

iwoca, one of the leading SME lenders in Europe, announced today a new debt funding package worth £270 million. This investment brings the total funding received by the company since its inception in 2012 to over £1 billion.

The funding includes £150 million (€175 million) in debt financing from Citibank and Insight Investment to support iwoca’s expansion in Germany, along with an additional £120 million from Barclays and Värde to cater to the growing demand for finance among UK small businesses. This follows previous investments of £200 million from Barclays and Värde Partners in October of the previous year, and £170 million from Pollen Street Capital in January 2023.

Since starting in 2012, iwoca has issued £3 billion in loans to SMEs across the UK and Germany, providing essential working capital.

iwoca is expanding its market presence by leveraging embedded finance technology and increasing its partnerships. This allows businesses to secure loans directly through various platforms, including Qonto and Countingup. This strategic expansion is crucial as it comes at a time when traditional high street banks are scaling back their funding to small and medium-sized enterprises (SMEs).

According to iwoca’s latest SME Expert Index, a significant majority (76%) of brokers have observed that high street banks are less interested in financing SMEs. Additionally, almost nine out of ten brokers (86%) anticipate a rise in the demand for finance within the next six months. Corroborating this trend, the British Business Bank’s 2024 annual report on Small Business Finance Markets indicates that specialist and challenger lenders have achieved a record high in their share of total gross lending, now representing 59% of the market. This shift highlights the growing importance of alternative lending sources like iwoca in bridging the SME funding gap.

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.”