iwoca, a fintech company specialising in small and medium-sized enterprise (SME) lending, has announced a £270m debt package to support its lending services in the UK and Germany.
The latest financing includes £150m from Citibank and Insight Investment to bolster iwoca’s growth in Germany, and an additional £120m from Barclays and Värde to enhance its UK operations.
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It has elevated iwoca’s total gross investment to over £1bn since its inception in 2012.
This follows a £200m funding round from Barclays and Värde Partners in October last year, and £170m from Pollen Street Capital in January 2023.
Since launch, iwoca claims to have disbursed over £3bn in loans to SMEs requiring working capital in the UK and Germany.
In the first quarter of 2024, the company has issued more than £200m across 9,000 business loans in the UK and Germany.
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By GlobalDataiwoca said it has been expanding its market share by integrating embedded finance technology and growing its partnership network.
This allows businesses to access loans through various platforms, including Qonto and Countingup.
iwoca CEO and co-founder Christoph Rieche 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.”
The increase in iwoca’s funding capacity coincides with a trend of high street banks reducing their SME funding.
According to iwoca’s SME Expert Index, 76% of brokers have observed a decline in high street banks’ willingness to fund SMEs.
Furthermore, 86% anticipated a rise in the demand for finance over the next six months.
The British Business Bank’s 2024 annual report on Small Business Finance Markets corroborates this shift, highlighting that specialist and challenger lenders now represent 59% of the total gross lending market.
