Capital

Small Firms Borrowed Bigger, So iwoca Borrowed Too

iwoca closed a 250 million pound facility with an unnamed UK bank and Waterfall Asset Management. The interesting number is not the facility, it is the loan sizes small firms are now asking for.

CapitalBy Servola Tech Desk2026-08-025 min read

AI-assisted, edited by humans. | Editor-in-Chief: Leon Soliman | Editorial standards

Small Firms Borrowed Bigger, So iwoca Borrowed Too

Key takeaways

Loans between 50,000 and 100,000 pounds were 42 percent of iwoca's applications in the first quarter of 2026, against 27 percent a year earlier, so small firms are financing projects rather than gaps through a lender whose own capacity is a facility it must keep renewing.
The 250 million pound structure was closed with Waterfall Asset Management and a UK bank that the announcement does not name, which means the counterparty your credit ultimately rests on is not disclosed to you and cannot be assessed by you.
iwoca wrote 58,000 loans worth more than 1.3 billion pounds in 2025, a 60 percent rise on the year before. Capacity that scales that fast is wholesale-funded capacity, and wholesale funding reprices when conditions turn.
Before committing to a project financed outside the banking channel, ask what funds the lender and on what term. Your renewal risk sits with an institution you never signed anything with.

A lender spent July announcing its own borrowing

On 27 July the London business lender iwoca said it had closed a 250 million pound funding structure with Waterfall Asset Management and, in its own phrasing, a leading UK bank. Romain Guilleminet, who runs capital markets at the firm, framed the milestone in terms of reach, saying iwoca had grown to a size where it makes a material impact on thousands of small businesses and their communities every month. James Cuby, who leads Europe for Waterfall, described it as extending an existing funding relationship and unlocking further lending capacity for UK small firms.

The numbers behind it are real. iwoca issued 58,000 loans worth more than 1.3 billion pounds in 2025, roughly 60 percent more than the year before, and has now lent to 96,000 small businesses since 2012, up from 60,000 as recently as 2024. Read as a company story that is straightforward growth. Read as a market signal it is something else, because the announcement is not about money being lent. It is about money being borrowed in order to be lent.

The application mix moved fifteen points in a year

The most informative figure in the release has nothing to do with the facility. Loans of between 50,000 and 100,000 pounds accounted for 42 percent of all applications in the first quarter of 2026, up from 27 percent in the same quarter of 2025. That is a fifteen point shift in the shape of demand inside twelve months, and shape matters more than volume here. A rise in total borrowing can mean almost anything. A rise concentrated in one band tells you what the money is for.

Sums at that level are not what a firm draws to bridge a late payment or cover a quiet month. They are what a firm commits when it is buying equipment, fitting out a site, or funding a piece of work that will not pay back for a year or more. iwoca itself names scaling operations and equipment investment among the uses. So the demand moving through this channel has changed character: it has gone from smoothing the working-capital cycle to funding projects, which is borrowing with a longer horizon and far less flexibility if it has to be unwound.

Capacity that grows with demand can shrink with it

iwoca describes the structure as designed to expand as demand grows, and that is a genuine commercial advantage over a fixed facility. It is also a description worth reading in both directions. A facility that scales with conditions is a facility whose size is a function of the funder's appetite, not of the borrower's creditworthiness. The small firm at the end of the chain has done nothing differently when the appetite changes, but the amount available to it moves anyway.

This is the ordinary mechanics of non-bank lending rather than a criticism of it. Banks fund loans substantially from deposits, which are sticky and cheap and do not have a maturity date agreed in a negotiation. Specialist lenders fund them from wholesale facilities, which are none of those things. That difference is invisible while credit is easy and decisive when it is not, because wholesale funding reprices and renews on a schedule that has no relationship whatsoever to the trading position of the businesses relying on it.

You never signed anything with the people funding your loan

Notice what the announcement withholds. The bank in the transaction is described only as a leading UK bank and is not named, while Waterfall Asset Management is. That is unremarkable in structured credit and completely reasonable commercially, and it still leaves a borrower in a position worth stating plainly: the institution whose continued participation determines whether your lender can renew your facility is not disclosed to you, and you have no way to assess it. iwoca's earlier funding partners are on the record and instructive as a group, including Lloyds, Citi, Barclays, Värde Partners, Pollen Street Capital and Insight Investment. Banks and credit funds, in other words, with different horizons and different reasons to stay or go.

For the borrower this creates a dependency with no contract behind it. You have an agreement with the lender. The lender has an agreement with a funder. Your access to credit at renewal depends on the second agreement far more than on the first, and you are not a party to it, cannot read it, and will not be told when its terms change. Nothing about that is improper. It is simply a risk that sits outside the document you actually signed, which is precisely why it tends not to get priced.

Ask what funds the lender before you commit the project

The practical step is a question to put before the next drawdown, and it is a fair one to ask any specialist lender. What funds this book, on what term, and when does that funding come up for renewal? A lender that has just announced a facility is in the easiest possible position to answer, and the answer tells you whether the money behind your credit line has two years to run or six months. Where the borrowing is project-scale rather than working capital, that timing question deserves the same attention as the interest rate, because a rate you dislike is survivable and a facility that is not renewed mid-project is not.

None of this argues against the channel. Specialist lenders reached 96,000 firms that the banking system was not serving at that size or speed, and the demand shift shows owners using them for genuine investment rather than distress. The point is narrower and it applies across European markets where the same wholesale-funded model operates: when your credit comes from a lender that is itself a borrower, you have taken on a counterparty you cannot see. Size the commitment accordingly, and keep a second route to capital open before you need it rather than after.

Frequently asked questions

Why does it matter that the bank in the facility is not named?

Because the identity and horizon of that funder shape whether your lender can renew your credit, and neither is available to you. Structured credit routinely leaves participants unnamed and there is nothing untoward in it. The consequence for a borrower is still concrete: the institution with the most influence over your access to capital at renewal is one you cannot evaluate, and its withdrawal would reach you through a lender relationship that looks unchanged right up until it is not.

Is borrowing from a non-bank lender riskier than borrowing from a bank?

Not in itself, and the pricing and speed often justify it. The difference is in how the two are funded. Deposits are stable and have no renewal date; wholesale facilities are negotiated, dated and repriced. That makes specialist lending capacity more sensitive to credit conditions than bank lending capacity, which matters most at renewal rather than at drawdown. Judge it by the term of the money behind the lender, not by the label on the lender.

What does the shift toward larger loans actually tell an owner?

That the channel is being used for commitments, not gaps. Applications between 50,000 and 100,000 pounds went from 27 to 42 percent of the total in a year, and sums in that band typically fund equipment, premises or expansion rather than a cash-flow wobble. Project borrowing is harder to reverse than working capital, so it deserves a firmer answer on funding continuity before the money is drawn, not a better rate.

The headline number here is the 250 million pound facility, but the number that should travel is 42 percent. Small firms have moved from borrowing to bridge a month to borrowing to build something, and they are doing it through a channel whose own funding is dated, negotiated and renewable. That combination is perfectly workable in good conditions and unforgiving in bad ones, and the time to establish which you are in is before the project starts, not at renewal.

iwocaWaterfall Asset ManagementSME lendingPrivate creditWorking capitalUK fintechNon-bank lending

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