Xero partners with iwoca in successful bid to improve lending for SMEs in the UK

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This morning, we were delighted to hear the news that iwoca, one of our longest standing alternative lending partners, received a grant of £10 million from the Banking Competition Remedies’ (BCR) Capability and Innovation Fund.

In total the fund is worth £425 million, which was divided into four pools. iwoca was awarded the Pool C fund, which was for companies that: ‘facilitate the expansion of business offerings to include, lending or payments services to SMEs’ in the UK.’

To boost productivity in the UK, small businesses need to get better access to the capital they need to fund growth. This is why we decided to get involved in iwoca’s bid. And we are thrilled to announce that as part of this bid, we will be accelerating our existing partnership with iwoca.

It will enable us to lead UK market research to identify customer pain points in existing SME finance offerings, and collaborate with iwoca to find better answers.

At the same time, we will also make iwoca’s finance more easily accessible to Xero’s 450,000+ subscribers.

Why now?

Small businesses face plenty of challenges around cash flow. We know that 50,000 businesses fail each year as a result of negative cash flow. What’s more, data from our Small Business Insights platform shows that only 52 per cent of small businesses in the UK were cash flow positive in June of this year.

This isn’t an issue that is going to go away any time soon.

Not only does poor cash flow affect business health, but it also has a significant impact on a business owner’s mental wellbeing. We recently found that two-fifths of small business owners said that the state of cash flow caused them sleepless nights.

These businesses tend to be the same ones that struggle to gain access to finance. Poor cash flow management can impact a company’s credit score. It makes it harder to raise funds. This hampers growth and has a major impact on productivity as a whole.

By working with lenders such as iwoca, we can play a bigger role in helping businesses get the funding they need.

When you combine the Xero platform with our network of accountants, it becomes easier for partners like iwoca get the insight they need to make the right credit decisions – always with customer consent, dramatically shortening and streamlining the process of applying for and receiving finance.

What’s next

The UK has historically been one of the easiest places in the world to start a business, but not enough has been done to help small businesses grow. Access to capital remains a major issue, and it is one that we are determined to tackle.

By working closely with iwoca over the coming years, our aim is to level the playing field for small businesses.

Keep up to date with all the latest developments here.

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