Female applicants 18% more likely to repay small business loans on time: iwoca

Small business lender iwoca has found female applicants are 18 per cent more likely to repay small business loans on time than their male counterparts. Women-led small businesses make up an estimated 20 per cent of iwoca’s customers and it has supported an estimated 2,400 women business owners in the UK with almost £50 million in lending since its launch in 2012.

iwoca uncovered the data in response to a study by the Federation of Small Businesses (FSB), which found a quarter of female small business owners cite the ability to access traditional funding channels as a key challenge, with many relying on alternative sources, such as crowdfunding, personal cash and credit, for growth.

Christoph Rieche

While iwoca’s technology-driven risk platform draws on thousands of data points to make credit decisions, gender is not included. iwoca’s data scientists were able to calculate gender-based statistics on loan repayment rates by checking customer application forms for self-identified female titles and then comparing the approximate default rates for both cohorts.

UK Finance data shows that the value of lending (loans and overdrafts) for UK Small and Medium Enterprises (SMEs) has contracted by 9.5 per cent in the last three years. In contrast, lending to consumers grew by 9.6 per cent year-on-year in October 2017.

Through more than 45,000 transactions, iwoca has issued more than £350 million to more than 15,000 small businesses across the UK, Poland, and Germany. It is one of the fastest growing small business credit providers in Europe.

“More can be done to narrow the entrepreneurial gender gap in the UK,” iwoca co-founder and CEO Christoph Rieche said. “Making it easier for women to access business funding would go a long way to achieving that. Sadly, the reality is that banks are withdrawing critical finance from across the entire small business sector and unless the Government takes action to encourage greater competition that will allow alternative providers to fill the hole, women will continue to be at a greater disadvantage from an unfair system, regardless of their higher propensity to repay on time.”