UK-based small business lender iwoca has secured a new GBP 270 million package of debt funding, taking the total gross investment in the company to over GBP 1 billion. iwoca has received GBP 150 million in debt financing commitments from Citibank and Insight Investment to support the company’s growth in Germany, and a further GBP 120 million from Barclays and Värde for the UK business, as it responds to mounting demand for finance from small businesses.

The new investment follows GBP 200 million in funding from Barclays and Värde Partners in October 2023, and GBP 170 million from Pollen Street Capital in January 2023. iwoca’s activity in the SME lending market Since its foundation in 2012, iwoca has provided GBP 3 billion in loans to SMEs in need of working capital in the UK and Germany. The company has already broken its record for the volume of loans issued in the first quarter of 2024, with over GBP 200 million lent across 9,000 business loans in the UK and Germany from January to March 2024.

iwoca has been growing its share of the lending market through embedded finance technology and increasing its number of partners — allowing businesses to access loans directly through a range of platforms including Qonto and Countingup. Bridging the SME funding gap iwoca’s increased funding comes as data shows more high street banks are reducing their funding to small and medium-sized businesses. The company’s new SME Expert Index finds that three-quarters (76%) of brokers report that high street banks are reducing their appetite for funding SMEs, while nearly nine in ten (86%) expect demand for finance to increase by mid-2024.

The British Business Bank’s 2024 annual report on Small Business Finance Markets also finds that specialist and challenger lenders’ share of total gross lending reached a record high last year, now accounting for three-fifths (59%) of the market. Officials from iwoca note that this investment will meet the surging demand for their Flexi-Loan among small businesses. Their rapid lending decisions and flexible terms set them apart from traditional banks, enabled by their technology.

With over 130,000 loans processed, their data-driven approach allows them to serve businesses excluded by traditional banks, particularly those with limited trading history. .