iwoca, one of Europe’s largest small business lenders, has 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 revenue to pay.
This product extension follows a successful integration with FinancingXchange, launched in September, which offered income-based finance loans between £1,000 and £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, like iwoca’s merchant cash advance, would be better or the same using a term loan. The ability to change payments based on business performance is a key benefit, with more than half (55%) of small business owners surveyed by iwoca saying that a financing provider’s flexibility in overdraft facilities traditional presents a challenge.
Flexible loan for businesses subject to 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 particularly beneficial for businesses operating in retail, hospitality and trade. electronic. This product comes at the perfect time, as many businesses experience significant fluctuations in sales over Christmas and New Years.
The Merchant Cash Advance also provides flexibility for businesses impacted by continued economic uncertainty, with supply chain and personnel issues making planning difficult for businesses. Additionally, revenue-based lending can drive growth for scale-ups whose revenue growth may occur months after securing funding – an effective alternative to venture capital or private equity financing.
Colin Goldstein, Director of Business Growth at iwoca, said, “At iwoca, we are transforming small business lending with brand 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 business. As small businesses recover from the pandemic, iwoca will give them the flexibility they need to scale their business.
Since May 2020, iwoca has successfully lent nearly £400 million to SMEs across the UK through the government’s Coronavirus Business Interruption Loan Scheme (CBILS). In Q1 2021, iwoca accounted for nearly 10% of all CBILS loan approvals by value. Most 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 £10 million to help them recover. of the pandemic.