iwoca raises new £200M funding line after reaching £2.5BN in finance lent

Bridging the SME funding gap – launched over ten years ago in the UK and backed by Acton Capital since its Series B in 2015, iwoca secured an increase and extension to its existing funding line in January this year – from £125 million to £170 million – as demand for SME finance soared. With the new £200 million funding line from Barclays and Värde, this now takes the total debt commitments to over £850 million.‍

“Although SMEs are the backbone of the economy, banks are pulling back from them.” -- Frank Seehaus, Acton Capital

“To fill that financing gap was not only great from a business perspective, but also from a societal perspective,” says Frank Seehaus, Acton Capital’s Founding Partner and former Vice President Corporate Finance at Deutsche Bank.

As high-street banks reduce access to capital for SMEs, this funding line equips iwoca to meet the growing SME demand for working capital. According to iwoca’s Q2/23 SME Expert Index, more than four in five brokers (84%) say high street banks are reducing their appetite for funding SMEs. This increased by 7 percentage points since Q1 2023.

A similar proportion of SME finance experts (81%) 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.

“We started iwoca after the financial crisis to offer SMEs the support that was so badly needed during uncertain times." -- Christoph Rieche, iwoca

“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,” says Christoph Rieche, iwoca CEO and co-founder.

Supporting the full range of SMEs – across the UK and Germany, iwoca has lent over £2.5bn since its launch in 2012 across more than 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. iwoca’s top-funded sectors to date are as diverse as construction (15% of total funding); retail (11%); and manufacturing & food production (10%).

“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.”

iwoca is reaching nearly 3 million businesses across the UK and Germany through its embedded lending technology, which 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, where repayments are a percentage of a business’s monthly sales.