Finance

Review of iwoca – UK’s first finance company dedicated to eBay sellers

Being able to pick up lucratively priced stock quickly is essential for many of you. However, swift and easy access to finance to get more business done seems only available to a select few large retailers.

Could this be about to change? We reviewed iwoca, a newly founded finance company that exclusively caters to commercial eBay sellers.

Founded in October 2011 by two banking professionals, the firm is now actively trading in the U.K. and has already funded a wide spectrum of businesses from rare book retailers to disco ball suppliers.

Who is eligible?

iwoca uses your eBay feedback score and trading history, in addition to conventional credit checks, to decide whether to offer you a working capital loan. They look for a minimum feedback score of 500 – so if your eBay star sign is purple, red, green or shooting then they could be a viable alternative to high street lenders.

How does it work?

An instant estimate is free of charge and, if eligible, application to approval happen within the same day through their website. iwoca’s terms are pretty straightforward: 90 days working capital in the form of a business loan with monthly repayments. They offer a prepayment feature that allows you to repay them whenever you like without incurring any penalty charges and their rates are in the range of 3-10% per month. Their scheme really only makes sense if their capital injection enabled you engage in short term business opportunities which would otherwise go astray due to financial constraints.

What do early adopters say?

packaging group

Nicholas, with blue shooting star eBay feedback, founded his company ND Online Retail Ltd in late 2010 and trades through eBay, Amazon and their website at www.packaging-group.co.uk. The company sells packaging materials used by fellow online retailers and crafters such as mailing bags, cellophane bags and envelopes. ND Online Retail Ltd has invested heavily in technology over the past year to allow it to process a high volume of orders on a daily basis. The next logical step for them was to introduce additional fast selling high volume products that would directly compliment their existing range. To do so, additional working capital was required.

When Nicholas was initially approached by iwoca, it appeared to be the obvious solution – quick and easy access to working capital and the possibility to clear the loan early if sales come in stronger than expected. Nicholas explains his decision to work with iwoca quite simply, “the fact that there was no arrangement fees or penalty charges for early payments was particularly appealing and, to top it all off, iwoca showed a real interest in my products, my eBay feedback and my plans for the future. You just don’t get that from a High Street lender!”

iwoca's vision

iwoca believes that it should no longer be only the privilege of FTSE 100 companies to gain instant access to working capital through banks or capital markets. iwoca's founder Christoph Rieche comments, "the scarcity of capital is a constraint to the growth of businesses of all sizes and we have been approached by e-commerce sellers with annual revenues from a few thousand to more than one million. Our quick turnaround time and flexible terms offer successful eBay sellers an appropriate solution when looking for capital to grow their business."

Our verdict?

The emergence of a finance company focusing on e-commerce is welcome news to the community. With access to instant working capital, reliable eBay sellers shouldn’t miss out on business opportunities simply due to a lack of funds. Although this type of short term financing is not right for everyone, it will certainly give many commercial eBayer’s a competitive edge. For more information on the services they provide, and to make your own judgment, take a look at their website here.

C
  • C
    Craig Spiros
  • April 19th, 2012
Intriguing model and something completely new. Longer term loans really aren't viable for purchases that need to be completed when and where they are available, stock just moves too quickly. I would imagine once you are set-up and have been loaned money once, returning on a second occasion is pretty straightforward.
C
  • C
    Christoph Rieche
  • April 19th, 2012
Thanks Craig, yes, for return customer it will be even quicker. I invite everybody to test us, signing up from scratch to getting an estimate literally takes under a minute - we timed it ;-).
L
  • L
    Linda4323
  • May 20th, 2012
No mention of the most important factor in borrowing money – The Interest Rates. Are they going to be comparable with High Street Banks or with such as Wonga, quickquid, ukpaydaytoday......, ? I don't think so.
    J
    • J
      James Dear
    • May 31st, 2012
    Hi Linda. Our rates are vastly cheaper than those of payday loans companies, although more expensive than banks. Typically we'll charge around 5% per month, although this can be higher if the ebay account is very new or if there's a bad credit history.

    Our loan is best used as a supplement to other more long term credit lines. If you need a few thousand extra for a couple of months (eg so you can seize a great buying opportunity) then you can take down an iwoca loan and repay as soon as the sales come through. This can massively reduce your total interest charges - we only charge for the time you have the money outstanding.

    In the end it makes sense to take a business loan if you can use it to make a nice profit *that you wouldn't have been able to otherwise*. If you can make £3,000 profit from buying an extra £5,000 worth of goods and you can shift the stock in three months, then having to pay back £500 in interest for the opportunity is probably not going to dissuade you from doing it. Yes, this money is probably more expensive than your bank loan, but then your bank loan is already being used generating profits in other stock lines.
J

This site uses Akismet to reduce spam. Learn how your comment data is processed.