UK lending – iwoca bucks the trend


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UK lending – iwoca bucks the trend

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Regular readers will know that iwoca is making more of our funding available and working with greater numbers of businesses than ever. But new research shows our mission to make finance a superpower for small business isn't being matched by the UK's major banks.

In fact, data from UK Finance shows that overall, SME lending fell by 8% across Great Britain between Q4 2014 and Q4 2018 – a drop of almost £8bn.

Businesses in North West have experienced the biggest drop, facing a reduction of 16%, which totals £1.6bn. The regions of the North West, North East and Yorkshire saw the largest drop in SME lending, while small businesses in London had the lowest drop in funding – 3%.

RegionQ4 2014Q4 2018Percentage changeTotal change
East Midlands£5,315m£4,945m-7.0%-£370m
East of England£6,857m£6,214m-9.4%-£643m
North East£3,206m£2,860m-10.8%-£346m
North West£10,355m£8,694m-16.0%-£1,661m
South East£12,411m£11,060m-10.9%-£1,351m
South West£11,021m£10,473m-5.0%-£548m
West Midlands£8,899m£8,041m-9.7%-£859m
Yorkshire & the Humber£7,250m£6,509m-10.2%-£741m
GB total£97,900m£89,968m-8.1%-£7,932m

It appears to be poorer areas that are facing the biggest reduction in SME finance. By analysing lending figures alongside the government's data, we can reveal that SMEs from local authorities in the top 10% of England's deprivation index saw SME finance fall by 17.4% between Q4 2014 and Q4 2018. The least deprived 10% saw SME finance fall by just over 11%.

In the 20 areas which saw the largest reductions in business lending, SME finance fell by an average of 36.8% over these five years. At opposite ends of the UK and opposite ends of the lending scale, Devon's Torbay witnessed the sharpest fall of 78.3%, while the Shetland Islands saw the largest rise in SME lending, at 75.4%


Going against the flow

Against the backdrop of the major banks reducing their SME lending, we've increased the levels of finance made available to businesses through iwoca. Between 2016 and 2018 we made more than £1 billion of funding available for small businesses, increasing from £170 million to £786 million.


“SMEs are vital for the health of the economy,” says our founder and CEO Christoph Rieche. “Our mission is to give business owners the funding they need so that they can do what they love, and by doing so, creating jobs and supporting communities right across the country.

“It’s therefore concerning that in many parts of the country, major banks aren’t serving small and microbusinesses with the funding required to help them thrive. That’s why at iwoca we’re focused on giving small businesses access to the finance they need to drive our economy forward.”

Not on the highstreet

It's no secret that bank branches are closing across the UK. But analysis shows that local authorities where SME lending decreased the most also saw sharper falls in the number of branches between 2014 and 2018. Of the 20 local authorities with the biggest percentage drops in SME lending, six saw more than a quarter of their bank branches close.

Conversely, out of the 20 local authorities where SME lending increased the most, only one had more than 25% of their bank branches shut.

London lending

Building for the future

Rob Bailey is an iwoca customer and founder of Swallow Hill Homes. Bailey's company has been restoring old buildings and converting them into homes since 2005. He's felt the withdrawal of the big banks first hand.

“Traditionally I would have an overdraft set up through my bank but they took it away after the credit crunch,” he says. “Having instant access to funding that I can just turn to at very short notice is really handy, which is why I use iwoca to help manage my cash flow. The fact that I can just wake up in the morning knowing I have to pay an invoice, request the money and it hits my account instantly is invaluable.”

Words by
Dan Smith

Dan Smith is Content strategist lead at iwoca and editor of Insights. He's written for a number of publications such as The Guardian and WIRED on topics ranging from finance to sport.

Article updated on:
January 20, 2020

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