With small business owners, especially online traders, finding it difficult to get access to bank lending, the potential for a startup to enter the field and shake things up is significant.
iwoca, the winner of Wired Money's Startup Pitch Stage on 1 July, could be that startup. The company won the attention and crucial votes of delegates at Wired's inaugural financial conference after pitching its business "Dragons' Den-style" to attendees, alongside over 20 competing startups.
What's the biggest challenge for a start-up which lends to eBay traders who can’t get funding? Funnily enough, it’s getting funding. Christoph Rieche, the CEO and co-founder of Iwoca – which stands for instant working capital – knows first-hand the difficulties faced by his customers. “If I went to a bank today there would be zero chance of me getting a loan that would make a difference for us,” he says. “The business has been incorporated for less than a year and trading for less than six months. Banks don’t work with companies like us on the scale that we require.”
It’s an impressive start for iwoca, finance they’ve made available has resulted in an additional £1,000,000 of stock being purchased and sold online. Whilst that on it’s own won’t make a dent in the Chancellors budget deficit, for small businesses it demonstrates the need for finance which high street banks simply aren’t making available.
There are only a couple of weeks left until the biggest marketplaces/ecommerce conference in the UK this year. ChannelAdvisor Catalyst is on the 28th – 29th May in London and news is just in of a panel discussion where some of the fastest growing eBay businesses will share the secrets of their success.
iwoca, the only provider of short term finance to online retailers in the UK, has announced that it will now offer online retailers a maximum loan value of £50,000. The new maximum loan amount replaces iwoca’s previous £20,000 limit.
Customers will still be able to choose a repayment term of between one day and six months and benefit from free early repayments.
Coupled with the rise of social networking, technological changes are allowing 'fintech' entrepreneurs to cut out banks entirely. iwoca, for example, analyses all of the data available from marketplaces such as eBay and Amazon, and is able to determine whether an applicant is eligible for a loan or not within five minutes.
There are over 300,000 UK businesses selling online in an ecommerce market worth €50 billion. In the past five years 367,000 people have become their own boss, taking the total to 4.2m, according to figures from the Office of National Statistics.
Christoph Rieche, CEO and founder of iwoca says a new Armchair Economy is propping up the ailing UK economy.
iwoca, which specialises in short-term loans to marketplace sellers, has lent its first million and won investment of £2m, less than a year after it opened for business. Internet Retailing talked to iwoca co-founder and chief executive Christoph Rieche to catch up on how the company has developed so far – and where it goes from here.
The Government’s numerous attempts at encouraging banks to lend to small businesses are causing confusion, say entrepreneurs.
Last week saw the formal launch of the Coalition’s £80billion Funding for Lending scheme. Yet in the same week the National Loan Guarantee scheme, launched in March this year, was withdrawn. Critics said the scheme, which offered savings of just one percentage point on loan rates, did little to encourage banks to lend. But is it time for the Government to stand back and let the market open up to more competition and a greater array of alternative sources of finance?
A new lender is looking to fund the army of spare room entrepreneurs who make a living selling items on eBay a rare piece of positive news amid the ongoing gloom surrounding access to finance. iwoca, a self-funded start-up formed by two former investment bankers in Fulham, south-west London, offers loans of up to £10,000 for online sellers in need of working capital.
Alternative lender iwoca now offers loans to businesses looking for trading finance to buy stock and wanting to sell on eBay and Amazon. It offers £20,000 for six months for 3 to 7 per cent all in.