Four fintechs share £40m funding pot to boost small business finance

Iwoca, Atom Bank, Currencycloud and Modulr all pledge to address £10bn funding gap for small business trying to raise finance

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Market failure: new entrants have pledged to lend billions of pounds to small businesses

Four fintechs have been awarded £40m between them to address the £10bn funding gap caused by the lack of small business finance.

The £40m is part of a £775m programme funded by Royal Bank of Scotland as a condition of its bailout during the financial crisis.

A total of £425m will be given in cash grants to rival business banks and financial technology companies to support small businesses.

Previous recipients include Nationwide, Investec and the Co-Operative Bank.

Read: Best small business loans in the UK

Iwoca

Iwoca has been awarded £10m in funding, pledging to make £5bn available to small businesses by 2023.

The lender has pledged an additional £13m on top of the £10m grant to help open an office outside of London with at least 50 staff.

The £10m grant will expand Iwoca’s SME customer base to 150,000.

Since Iwoca launched in 2012, the small business lender has already funded 35,000 businesses in the UK, raised £350m in equity and debt finance.

Iwoca will make finance more accessible through the introduction of OpenLending, a customisable self-serve “plug & play” platform for a growing number of SME fintech partners involved in small business finance.

And Iwoca has partnered with Xero, the online accounting platform, to make its finance more accessible to Xero’s 450,000-plus UK subscribers.

Christoph Rieche, Iwoca’s CEO and co-founder, said: “Iwoca is the only SME lender in the UK with the scale, level of experience and technology to dramatically expand and transform access to finance for small businesses. Our proven track record of industry firsts includes integrating with eBay and Amazon, being the first business to offer a Lending API, and the first SME lender to integrate with OpenBanking. Winning the grant enables us to accelerate our mission to make finance available to one million SMEs.”

Atom Bank

Atom Bank was also awarded £10m BCR grant, which it says will help deliver an additional £3bn of business financing by March 2024.

The digital bank has already lent in excess of £200m to UK SMEs

The challenger bank will also:

  • Deliver a digital toolkit to support the needs of small businesses
  • Create 70 jobs in the North East of England
  • Will invest £15m of its own money alongside the award

Atom aims to attract over 340,000 small businesses to its platform by March 2024.

Mark Mullen, chief executive and co-founder of Atom bank, said: “As a fast-growing new entrant we know just how hard it is to get a business off the ground and we recognise that the needs of smaller businesses are different from those of larger firms.

“We will provide SMEs with a truly digital offering that allows them to get on with the day-to-day running of their businesses, giving value back to customers and bringing some much-needed competition to the business banking market.”

Currencycloud

Currencycloud, the B2B cross-border payments provider, was also awarded £10m of funding to expand its platform.

Mike Laven, CEO of Currencycloud, said: “We’re delighted to have been awarded this £10 million grant by BCR to advance our global transaction platform to better serve the needs of SME customers, as part of our mission to open up high-quality international payments beyond the realm of big banks.”

Modulr

The fourth grant recipient was digital payments platform Modulr Finance, which has pledged to match the £10m BCR grant with £10m of its own money to help fund its expansion, creating 53 new jobs in Edinburgh.

Further reading

150 UK small business grants to apply for right now

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