Fintech firm iwoca, which claims to be one of Europe’s largest small business lenders, recently announced the expansion of its merchant cash advance product to all small businesses “accepting card payments in the UK.”
As mentioned in an update shared with CI, the merchant cash advance will “enable small businesses to repay their loan based on their sales and stay in control by choosing what percent of their revenue to pay.”
SMEs “frustrated by lack of flexibility from other loan providers”
This product expansion has been announced after an integration with FundingXchange, launched in September, which “offered revenue-based finance loans between £1,000 – £50,000 to online sellers on eBay.”
The update also mentioned that the decision to expand “comes as the majority of small business owners (87%) using loan products suggest that a revenue-based loan, such as iwoca’s merchant cash advance, would be better or the same as using a term loan.”
The ability to change payments “depending on business performance is a key benefit, with over half (55%) of SME owners surveyed by iwoca saying that a finance provider’s flexibility in traditional overdraft facilities presents a challenge.”
Flexible loan “to benefit businesses with seasonal fluctuations”
The merchant cash advance is “a flexible loan that enables businesses who experience volatile swings in demand to stay in control of their finances, and will be particularly beneficial for those businesses operating in retail, hospitality and e-commerce.”
The update also noted that this product comes “at the perfect time as many businesses experience significant swings in sales over Christmas and the New Year.”
The merchant cash advance also provides flexibility to businesses impacted by continued economic uncertainty, “with supply chain and staffing issues making it difficult for businesses to plan.”
In addition, the revenue based loan can drive growth for scale-ups whose revenue growth may “come months after finance is secured – an effective alternative to venture capital or private equity funding,” the update explained.
Colin Goldstein, Commercial Growth Director at iwoca, stated:
“At iwoca, we’re transforming small business lending through brand new innovations powered by Open Banking technology. With our merchant cash advance product, SMEs across the country can now repay their loans in line with 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.”
Since May of last year, iwoca has lent nearly £400 million to SMEs across the United Kingdom through the UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS). In Q1 2021, iwoca represented almost 10% “of all CBILS loan approvals by value.”
Recently, iwoca has been “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 £10 million to help them recover from the pandemic.”
In June of last year, iwoca launched iwocaPay – an online buy now pay later invoice checkout to “help small businesses get paid.”
The lender is also “reaching up to 2 million businesses across the UK and Germany through its embedded lending technology, which allows businesses to access loans through a range of platforms such as accountancy software apps and digital neo-banks.”
iwoca has teamed up with the online therapy platform Spill to “launch free mental health support – which will be available for all small business owners.”