The SME lender is hoping to give the UK’s North a sizeable business boost.
European small business lender iwoca has announced today its intention to pledge £100m in lending to micro and small businesses in the UK’s Northern regions by 2020, as it fights to counteract the withdrawal of credit by UK banks.
The lender believes the North to have been particularly affected by the withdrawal, with data by UK Finance showing the value of lending for SMEs in the region to have contracted by 14.3 per cent over the past three years. This is compared to the national average of 9.5 per cent.
In Manchester, a Northern powerhouse city, the contraction has hit 22.8 per cent over the period, which is twice the contraction experienced in London (11.4 per cent). iwoca also noted recent evidence shown by FSB’s Voice of Small Business Index, which shows that business confidence in the North West of England now stands at -17 per cent, compared to London’s +13 per cent.
iwoca’s own support for Northern small businesses has seen its lending increase by 89 per cent per year over the past three years, with lending in Manchester alone growing by 65 per cent per year. With this latest pledge, iwoca aims to reserve £15m specifically for Manchester.
Christoph Rieche, co-founder and CEO of iwoca, noted that micro businesses (which employ less than 10 people) currently account for 96 per cent of the UK’s 5.5m businesses, 1 in 3 private sector jobs and 20 per cent of all economic output.
He added: “In light of the continued lack of action by the banks to increase access to finance for this sector of the economy, iwoca is pledging to lend £100 million in the North of England by 2020.”
“The banks claim that small businesses are simply not interested in credit products. In reality, the banks discourage these businesses from taking finance through lengthy and cumbersome application forms, and rigid and unfair lending criteria.
“iwoca understands the needs of small businesses. That's why our applications are simple and straightforward, and we have built technology to make faster and fairer lending decisions, breaking the barriers small businesses face to accessing finance.”