SME revenues grow by a fifth when given access to loans

New research from Capital Economics, commissioned by SME lender iwoca, has found that SMEs receiving a loan can increase their monthly revenues by an average of 19%.

The analysis is based on data from current accounts of thousands of iwoca customers, finds that taking a loan is associated with an increase in revenues of nearly a fifth (19%) within a year, compared to if no financial support had been accessed.

The report points to a major shift in the structure of the SME lending market over the past decade. When iwoca launched in 2012, the UK’s five largest banks accounted for around 60% of SME lending, compared to 40% from challenger and specialist banks. That balance has now reversed, with new lenders playing a far greater role.

Christoph Rieche, CEO and co-founder of iwoca, said “SMEs make up 99% of UK businesses and over half of our economy, but too many are still locked out of the finance that would help them invest and innovate. This report, for the first time, shows the huge upside we create by fixing that gap. It proves what we see every day – when small businesses can access the finance they need, they grow, hire and drive prosperity in their communities. Access to finance isn’t just a business issue – it’s a productivity issue for the whole economy.”

Andrew Evans, Deputy Chief Economist at Capital Economics, said “Our analysis reveals just how powerful access to finance can be for small firms. Businesses receiving an iwoca loan saw inflows to their accounts rise by almost 20% within a year – an impact that is rarely captured in data. It’s evidence that flexible, fast lending isn’t just helping individual firms grow, but boosting output, jobs and tax revenues across the economy. As awareness of non-bank lenders grows, there is significant potential for this part of the market to help drive UK productivity.”