iwoca review: In brief, they were founded in 2011 by Cristopher Rieche and James Dear offering small loans exclusively to online sellers. Since getting £5m of VC investment in 2014 from Global Founders Capital and Redline Capital Management and $20mn in 2015 from CommerzVentures and Action Capital iwoca now offer loans of up to £150,000 to start-up and established businesses via their online platform. They’ve also won awards from Smarta 100, Wired and Credit Today for their disruption of the business lending space.
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Alternatives
| Business Loan Provider/Broker | How much can you borrow? | How much does it cost? |
|---|---|---|
| Loans from £1000 to £20M | We will not charge you any fee for our service as we receive payment directly from the lender(s) based upon successful provision of finance |
 | £1,000 to £500,000 | If you borrowed £10,000 for 12 months at 49% representative APR, with an interest rate of 40% p.a. (variable), then, all in all, the total amount you’d repay would be £12,294. |
 | £10,000 to £500,000 | From 6.9% per year + Origination Fee, 4.49% to 10.49%, A single one-time fee to cover the costs of evaluating and originating your loan |
 | Up to £250k with uncapped 1% cashback on all card spend. | The Capital on Tap Business Credit Card rates can range from as low as 15.5% to 35.15% (variable). |
Our iwoca Review: Here’s what happened when we took out an iwoca business loan
iwoca has a great ad of them going into a high street bank and asking for a business loan. The process as you can imagine is as painful as expected. It’s the usual, “please call so and so”, “we can arrange an appointment next week”, “we’ll need a full business plan and forecasts in this format” etc.
Are iwoca really disrupting business lending?
iwoca are disrupting SME loans by streamlining the process online. And when I say streamlining the process I mean lightening fast. To test the service we took out a loan with them, the whole process from visiting their website to having funds on our account was about three hours.
So how do iwoca provide business loans so quickly?
The speed at which iwoca can approve a loan is no doubt down to being a specialist lender and not being an all encompassing high street bank. They are good at one thing and focus on that, lending funds to British businesses. As such, their due diligence and approval process is very efficient.
The iwoca application and approval process works like this…
You visit the website and enter your company information. Once you input the details of your firm it’s very easy for a lender to see your past accounts and credit worthiness so for applications below £15k that’s it.
Above £15k the application will ask you to upload some docs (no more than a few bank statements and VAT’s, they don’t even ask for company accounts unless you are asking for £75k plus).
You also have the options of linking your online marketplace accounts like Amazon, eBay, notonthehighstreet and payment services like skrill, paypal or accountcy software like Xero and sage accounts.
These integrations allows iwoca to verify turnover automatically. But for more established companies data from companies house is easily accessible via an API.
It’s also worth noting that iwoca only lend from £1,000 to £150,000 so we’re not talking huge amounts of risk here.
iwoca use soft credit checks, so when you apply there is no foot print on your credit file.
What are iwoca interest rates like?
Once your company details are in you choose how much you want to borrow from a nifty slider and for how long. Loans are up to a year and the APR is from 49%. Which on a monthly basis is between 2% and 6%.
However, if for example you are borrowing £10k from iwoca the total repayable over 12 months will be about £12k. Interest is charged daily and there are no early repayment fees. Which is great for short term borrowing as there is no front loaded interest and you only pay for the days you borrow.
Once you submit your application, the system automatically approves or declines your loan.
How much can you borrow from iwoca?
iwoca say they tend to lend equivalent to a business’s monthly turnover.
So if you are approved for an amount up to £150,000 you get an iwoca credit line which you can draw down on within 30 days. You don’t have to borrow the entire amount of what your business is approved for.
Even though iwoca is an online business you still have to chat to someone there to get funds on your account.
With any specialist, especially in the alternative finance space it’s important to understand how they differ from traditional providers. Also, this is business to business, so having a single point of contact is very handy and with iwoca you get an account manager to deal with any issues.
Once you’ve had a chat with your account manager (about 5 mins, based in HQ, all very friendly) to answer any questions you link a debit card to make repayments and submit your personal ID via text and smartphone through their duedil partner onfido.
You also have to send them 1p from your business account to their account to ensure the bank details are correct. You’d be amazed how often people send the wrong bank information for large money transfers, so this is actually a very good little saftey net. Of course, it also acts as bank account verification and proof that the application has authority to apply and receive funds.
And that’s about it – within the hour, the funds were on account.
The iwoca business loans are subject to a personal guarantee, so it’s important to note that whilst it may be easy for your start up to borrow money from iwoca. Even if it’s in a LTD, you are still personally liable to make the repayments. iwoca don’t take debentures, which you can see when you agree to the loan terms pre application.