iwoca reports embedded finance is vital for loan approvals for SMEs

By Joy Dumasia

New data from iwoca, one of Europe’s largest small business lenders, reveals how embedded finance will play a vital role for small businesses as they look to recover from the pandemic.

iwoca data shows that 50% of customers who applied through an embedded finance partner received a lending decision in less than two minutes, compared with 12% of direct applications. In addition, small business applications via embedded finance partnerships are 58% more likely to be approved than those that applied to iwoca directly.

Businesses can access loans from iwoca through a range of platforms such as accounting software and digital neo-banks, including Xero, Tide and Funding Options. This makes applying for finance far simpler for SMEs as loan offers are readily available in the services they use day-to-day.

Access to finance will be key in helping SMEs get back on track following the impact of the COVID-19 crisis. However, with the closure of the Bounce Back Loan Scheme, many high street banks are likely to reduce their lending to small and micro businesses as their risk appetite narrows.

Colin Goldstein, Commercial Growth Director at iwoca, said: “The technology behind embedded finance has huge potential for SMEs, and the possibilities to embed finance are vast. Small businesses are already benefiting from embedded finance through faster and more successful loan applications. iwoca has led the way in developing embedded finance products, and well over a quarter of businesses we are now serving come through our embedded finance partners. Accelerating this should be a central pillar to rebuilding our economy, and we look forward to working with more partners to help their small business customers get the finance they need.”

Recently, IBS Intelligence reported that According to iwoca’s quarterly SME Expert Index of UK brokers, demand for unsecured finance from SMEs is rising.