Iwoca's capital way to assist eBay traders However they have already raised enough to take on nine members of staff at their office in Fulham, and Mr Rieche is very clear on the size of the opportunity available to Iwoca. In the UK alone, independent traders selling through online marketplaces such as eBay and Amazon are already turning over £10bn of business a year, a sizeable part of the £70bn spent on online shopping in the UK annually. Online trade accounts for around 15pc of total retail sales in Britain and is growing fast. That £10bn generated by online sellers is expected to double to £20bn in the next five years as more entrepreneurs set up shop. "Doubling the trading volume in five years, you would expect that would need a lot of capital," said Mr Rieche. To get off the ground, new traders will need services like ours, and we anticipate that the small clients will get bigger and bigger. Identifying this fast-growing market and the difficulty that sole traders have in obtaining working capital to buy stock, was the catalyst for setting up Iwoca. "We saw an opportunity to combine three very interesting strands," said Mr Rieche. Strong growth in the e-commerce industry, which is changing the retail landscape; the ongoing worsening of the credit situation for small businesses; and, thirdly, the ability to access data much more quickly using technology which wasn't available a few years ago. We're really seeing demand from all parts of the eBay trading community. We have customers who have well beyond £1m in revenue across eBay, Amazon and their own websites, down to customers who take in less than £50,000. The company has built a model which assesses the risk of lending to an individual based on much more than just sales figures - the quality of customer feedback, how successful they are at attracting business through social media, and credit history all go into the calculation. "We ask for the same information the bank would, and then everything else we use is publicly available - the customer feedback and so on," said Mr Rieche. A bank's system will not look at the eBay history, how active they are on social media. You need to be very online oriented, like us, to understand the benefit of these marketing strategies. We can assess a lot about them from that. Positive customer ratings are gold dust for eBay traders, impacting not just on sales but margins, says Mr Rieche. That's the only way you have of building trust when you're an online seller. If you lose your reputation then you have to start offering your merchandise at a lower price to win sales. The model is still being refined, but Iwoca's goal is to make it as automated as possible. This may spark concern among entrepreneurs turned down for bank loans when the "computer said no," but Mr Rieche says it will mean "minimum hassle, minimum mistakes" for the company and its customers. The typical loan terms are for three months, with the money repaid in three instalments, at an average interest rate of 5pc. An example on the company's website for a three-month unsecured business loan of £3,000 sees the borrower pay back £3,300 in monthly instalments of £1,150, £1,100 and £1,050. Mr Rieche acknowledges that getting credit from Iwoca is certainly not the cheapest way of borrowing, but says other aspects of the service attract sellers. "There is no fee for paying the loan back early, no administration fee," he said. The vast majority of customers, if they buy stock today, generally will make their money back within six weeks, so they repay early. As part of its marketing strategy, Iwoca has made itself known among eBay sellers by hosting online discussions on the issues affecting them, and holding "offline" events where the traders, who mostly work alone, can meet up in person. While continually looking out for new funding and improving its loan assessment model, Iwoca also has an eye on the long term. "The UK market is massive - only second to US by volume - but there are other really interesting opportunities in Europe, Australia, Canada and of course the US," Mr Rieche said. Globally, eBay and Amazon do well beyond $100bn in transaction volume, of which approximately 50pc is done by our clients, so there is a huge opportunity. Is he concerned that conventional lenders will eventually want to take a share of this growth market? "In the current situation, banks have so many issues around their current businesses, the last thing they are able to do is build a completely different technology system and one catering to a niche market like ours," he said. But at some point, if we're very successful, then a bank will buy us.