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Alternative providers to lend more than £100m to UK businesses for Alibaba transactions

Alternative finance companies hope to provide over £100 million in financing to UK small and medium sized businesses for purchases on the e-commerce platform.13 Mar 2015

Alibaba, China's largest e-commerce company, has announced partnerships with two UK start ups to provide finance for smaller companies to use to buy from China.

The partnerships with "lending pioneers" iwoca and ezbob will make it easier for UK SMEs to gain funding to buy from Chinese suppliers over Alibaba's platform, Alibaba said in a statement.

Through a new product called e-Credit Line, UK buyers will be able to apply for credit, receive approval and use that credit to buy products. The credit can be used for "multiple drawdowns" rather than just one transaction. The Chinese supplier will be paid directly through iwoca or ezbob.

Iwoca will offer up to £50,000 (US$75,000) for up to six months on interest rates of 1.5% to 2% per month, levied on the outstanding balance, while ezbob will offer from £50,000 to £120,000 for up to 15 months at 0.75%.

Iwoca chief executive Christoph Rieche said he expects to finance over £100 million of deals over the next 12 months. The partnership with Alibaba "highlights the dramatic growth in alternative forms of lending and the economic shift away from established bank lenders," he said.

Russell Gould, chief operating officer for ezbob, said that UK buyers' activity "will also benefit Chinese suppliers. We predict that this will fuel a significant increase in UK trade volume on the platform".

Ezbob is owned by Orange Money, which Alibaba said is the largest business e-lender in the UK and the first online SME lender to be an approved financial intermediary for the European Union and the European Investment Fund.

Iwoca, or "instant working capital," has secured financing from investors including Global Founders Capital and Redline Capital, according to Reuters.

Alibaba announced a similar partnership with Lending Club last month, offering peer-to-peer finance to US buyers.