The Chinese ecommerce company is partnering Iwoca, set up in 2012 by two former investment bankers and backed by venture capital, and Ezbob, which is owned by Orange Money and bought Wonga’s small business lending division last month. The intention is to help small British businesses that struggle to meet the heavy upfront payments demanded by Asian suppliers.
The initiative comes shortly after the Chinese group teamed up with Lending Club, the US peer-to-peer lender, to provide loans to small business customers.
Wei Duan, Alibaba.com’s European market and business development director, said the partnerships in the US and UK — its two biggest markets outside China — would be followed by similar tie-ups with non-traditional lenders across Europe. The move is the latest in the rise of businesses using technology and online platforms to extend credit quickly and more effectively to small businesses than traditional banks that are unwilling to take the risk.
Alibaba.com will initially introduce borrowers to lenders through its ecredit line. However, Ms Duan said that over time it could supply data to the lenders to help them to build and refine their risk models. Alibaba.com provides a business-to-business market for about 40 industries supplying anything from automotive parts to cosmetics.
Companies will be able to borrow as much as £50,000 for up to six months through Iwoca at interest rates of 1.5-2 per cent a month. Ezbob will charge interest starting at 0.75 per cent to extend between £50,000 and £120,000 in credit for up to 15 months to Alibaba.com customers.
Russell Gould, chief operating officer of Ezbob, said: “We predict that this will help fuel a significant increase in UK trade volume on the Alibaba.com platform.”
Christoph Rieche, co-founder and chief executive of Iwoca said: “Alibaba has many customers in the UK that use it to buy products from China and these customers find it tough to gain financing from the banking channel.” Mr Rieche explained that Iwoca applies internal data analysis to underpin lending decisions. “We’re using a very data-driven risk angle to understand our customers better and faster, so we can provide financing where banks cannot”, he said. “The discussion with Alibaba goes back a long way,” he added. “It’s the first time in Europe you see two technology companies coming together to provide a trade finance proposition to UK businesses.”
About: iwoca offers flexible credit to small businesses across Europe, allowing them to take advantage of opportunities previously only available to their larger peers. From placing larger stock orders to bridging cashflow gaps, finance helps power our customer’s growth.
iwoca was launched iwoca in 2012 and has already grown into one of Europe’s leading FinTech lenders. More startup than financial institution, it uses technology to eliminate the cost and complexity associated with traditional business finance. That means it can offer instant decisions and has no upfront fees, no lengthy forms and no long-term commitments.
Most importantly technology has allowed iwoca to build a revolutionary risk model that understands any small business based on its trading data. Take an online retailer for example – analysing customer feedback scores, seasonal trends and profit margins helps iwoca to predict the company’s future health. In fact iwoca looks at thousands of data points for every applicant to make fair lending decisions, instantly.
Source: Financial Times