Iwoca: Fintech lender secures £200m debt to support larger SMEs

Small business lender Iwoca has secured £200m of debt funding as the fintech looks to grow its market share through bigger loans.

The investment was provided by Wall Street giant Citigroup and new backer Waterfall Asset Management. It follows a £270m package from Citi and Barclays announced in May.

The London-based firm, which provides credit to small and medium-sized enterprises (SMEs), has attracted nearly £1.5bn of investment since launching in 2012. That includes £740m in debt over the last two years.

Iwoca added that it has doubled the maximum size of its core Flexi-Loan product to £1m to meet “uptapped demand” for finance among medium-sized firms. It previously raised the limit to £500,000 from £200,000 in 2022.

The firm’s research suggests nearly one in three British SME finance brokers believe loans over £100,000 will see the most new applications over the next six months.

High street banks have become plagued with the perception that they are deliberately pulling back from SME finance, sparking scrutiny from politicians and regulators.

The majority of SME funding now comes from alternative providers, with the likes of Iwoca, Oaknorth and Allica Bank enjoying bumper growth in recent years.

According to its latest accounts, Iwoca’s operating profit surged 146 per cent to £67.1m last year, from £27.3m in 2022. Its revenue jumped 82 per cent to £142.6m.

Iwoca said on Monday that its revenue continued to hit record levels this year, with an annualised revenue run rate of £251m in the third quarter, up 62 per cent compared to the same period last year.

The firm said it lent £730m across 35,000 business loans from January to the end of October. These figures are up 76 per cent and 82 per cent, respectively, from a year earlier.

Christoph Rieche, Iwoca’s co-founder and chief executive, told City AM in June that the firm was ready to expand into a new country after entering the German market in 2015.

“Our vision is to become ever more relevant to more businesses. Medium-sized businesses tell us that – just like smaller businesses – they are finding it difficult to access working capital finance,” Rieche said on Monday.

“Like so many SMEs, it’s been a rollercoaster over the last decade. The Iwoca team has stuck together to ride through the ups and downs, and we’re humbled to have now grown to a size where we make a material impact on thousands of SMEs and their communities every month.”