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European SMB lender Iwoca secures £270M in debt financing

Illustrated collage of UK and European currency and an open door.

Illustration: Shoshana Gordon/Axios

Iwoca, which provides business loans and trade credit financing to SMBs in the U.K. and Germany, has secured an additional £270 million to grow its loan book.

Why it matters: While big banks are cutting back on lending to small businesses, startups are stepping in to provide them with working capital.

Zoom in: The London-based lender received £150 million from Citigroup and Insight Investment for its business in Germany and an additional £120 million from Barclays and Varde Partners for its U.K. business.

By the numbers: Since its founding in 2012, Iwoca says, it has processed more than 130,000 loans and lent more than £3 billion to small businesses.

  • In the first quarter of 2024 alone, the company lent £200 million across 9,000 business loans in the U.K. and Germany.

The big picture: Iwoca's growth has come as traditional British banks have slowed their lending to SMBs.

  • According to the British Business Bank's recent report on small-business financing, U.K. banks lent £59.2 billion to SMBs in 2023, down 9% from the prior year.
  • That follows a larger trend, as the four largest banks in the U.K. supplied about 63% of smaller business lending in 2014 but just 41% in 2023, as startups, challenger banks and non-bank lenders stole market share from incumbents.

Flashback: Iwoca announced a £200 million debt facility from Barclays and Varde Partners last October and a £170 million funding line from Pollen Street Capital in February 2023.

  • Altogether, the company says it has raised over £1 billion since being founded.
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