iwoca Extends Market’s First Revenue-Based Loan to Support Post-Pandemic SME Recovery
iwoca, one of Europe’s largest small business lenders, today announced the extension of its Merchant Cash Advance product to all small businesses accepting card payments in the UK.
The merchant cash advance will allow small businesses to repay their loan based on their sales and maintain control by choosing the percentage of their income to pay.
SMEs frustrated by the lack of flexibility of other donors
This product extension follows a successful integration with FundingXchange, launched in September, which offered income-based financial loans between Â£ 1,000 and Â£ 50,000 to online sellers on eBay.
The decision to expand comes as the majority of small business owners (87%) using loan products suggest that an income-based loan, such as iwoca’s merchant cash advance, would be preferable or the same. to a term loan. The ability to change payments based on business performance is a key benefit, with over half (55%) of SME owners surveyed by iwoca stating that a finance provider’s flexibility in overdraft facilities traditional poses a challenge.
Flexible loan for businesses with seasonal fluctuations
The Merchant Cash Advance is a flexible loan that allows businesses that experience volatile fluctuations in demand to maintain control of their finances, and will be of particular benefit to businesses operating in the retail, hospitality, and commerce industries. electronic. This product is timely, as many companies experience significant fluctuations in sales over Christmas and New Years.
The Merchant Cash Advance also provides flexibility for businesses affected by persistent economic uncertainty, with supply chain and personnel issues making business planning difficult. In addition, income-based lending can stimulate the growth of scale-ups whose income growth can occur months after securing funding – an effective alternative to venture capital or private equity financing.
Colin Goldstein, Director of Business Growth at iwoca, said:
âAt iwoca, we are transforming lending to small businesses with all new innovations powered by Open Banking technology. With our Merchant Cash Advance product, SMEs across the country can now repay their loans based on the seasonal flow of their businesses. As small businesses recover from the pandemic, iwoca will give them the flexibility they need to scale their business. “
As of May 2020, iwoca has successfully loaned nearly Â£ 400million to SMEs across the UK through the government’s Coronavirus Business Interruption Loan (CBILS) program. In the first quarter of 2021, iwoca accounted for nearly 10% of all CBILS loan approvals by value. More recently, iwoca was accredited by the British Business Bank as a lender under the Recovery Loan Scheme (RLS) which will allow businesses to access loans of up to Â£ 10million to help them get by. recover from the pandemic.
In June 2020, iwoca launched iwocaPay – an online purchase now pay later bill payment to help small businesses get paid. The lender also reaches up to 2 million businesses in the UK and Germany with its integrated lending technology, which allows businesses to access loans through a range of platforms such as accounting software applications and new digital banks. iwoca recently partnered with the online therapy platform Spill to launch free mental health support, which will be available to all small business owners. Small business owners can sign up for their free video therapy session here.