Executive Summary
iwoca commissioned Capital Economics to assess the role of SME finance in supporting economic growth and to quantify the impact of its lending on the UK and German economies. The analysis provided clear evidence of iwoca’s contribution to SME performance and to national and local economic outcomes.
Client Background
iwoca is a finance provider for small and medium-sized enterprises (SMEs) in Europe. Its lending supports SMEs across a wide range of sectors, making access to rigorous economic analysis important for demonstrating the broader impact of its financing.
Challenge
iwoca sought an independent assessment of how SME finance drives economic growth and how its own lending activity affects its customers' revenues, as well as broader GVA, jobs and tax revenues in the UK and German economies. Understanding the effects at both the firm and macroeconomic level was central to the brief.
Solution
We delivered a report combining a review of the SME landscape, a literature review and original analysis of iwoca’s data. This included:
- An overview of SMEs’ role in the UK and German economies, including business numbers, employment and GVA contributions.
- A review of existing evidence showing how improved access to finance enables SMEs to invest, raise productivity and increase revenues.
- Primary analysis applying standard techniques to iwoca’s internal data to estimate the macroeconomic impact of its lending on GVA, jobs and tax revenues at national and local levels.
- Econometric modelling using an anonymised dataset of UK SME current accounts provided by iwoca, showing that SMEs taking an iwoca loan experienced around a 20% increase in current account inflows 7–12 months after receiving funding.
The final deliverable was a Word-style report with analysis, charts, tables and graphics. The full report can be accessed here.
Detailed Results
The report demonstrated iwoca’s impact on SME activity and on the wider UK and German economies. It highlighted the role of alternative lenders in enabling SME growth and contributing to wider economic activity.