iwoca CEO: A fully-charged fintech sector can drive SME growth after Bounce Back Loan scheme closes
London, 5th October 2020. The CEO of iwoca, one of Europe’s largest business lenders, has outlined the need for the fintech industry to be strengthened so it can support the growth of small and micro-businesses after the Bounce Back Loan scheme closes at the end of the year.
Writing in CityAM [see article], Christoph Rieche argues that these smaller businesses struggled to access finance from large banks before the scheme was introduced, and that this is likely to be the case after the 100% government guarantee ends.
With over 1 million SMEs approved for a Bounce Back Loan so far, he states that the take-up of the scheme should “serve as a wake-up call for everyone in the finance industry” as proof that there has always been a clear demand from SMEs for financial support, but that this demand has not been met by high street banks because of their risk appetite.
The iwoca CEO believes that fintechs can help fill this funding gap, but for the industry’s full potential to be realised, a number of key issues should be addressed:
Level the playing field to ensure non-bank lenders have the support of regulators to access capital on competitive terms – just as large banks can – to support micro and small businesses as the Government-backed loan schemes wind down
There should be a greater level of industry cooperation through the Bank Referral Scheme so that businesses can reach out to a range of lenders to give themselves the best chance of accessing finance
The finance industry, business groups and government must promote the clear benefits of Open Banking and build up trust amongst small businesses looking to use it
Christoph Rieche, iwoca CEO and co-founder said:
“The launch of the Bounce Back Loan scheme was a watershed moment for hundreds of thousands of SMEs across the country.
“However, if smaller businesses are going to be able to access the finance they need after the scheme ends, then fintechs need to be given a greater opportunity to do what they do best.
‘The Covid-19 pandemic has exposed the cracks within the ecosystem of small business support. Bounce Back Loans managed to paper over these, but we now have an opportunity to fully address these weaknesses and give SMEs the brighter future they deserve.”
Notes to the Editor:
iwoca is unlocking economic growth by expanding the financial possibilities available to small business owners. Since launching in 2012, we have made funding available to 50,000 businesses and have raised over £400 million in equity and debt finance. For more information go to www.iwoca.co.uk, like our Facebook page and follow us on Twitter @iwoca and Instagram @iwoca.