The 19-year-old forward has appeared briefly for the Gunners this season, with his most notable appearance coming in that heavy 3-0 League Cup defeat to Sheffield Wednesday.
Iwobi has wowed coaches and observers alike in the Arsenal youth teams, and now the next step in his development should be a successful loan spell where he can gain regular first-team football.
The Championship is the obvious destination, and playoff contenders Birmingham City are as qualified as any to take him on and aid his development further.
The Blues have a decent track record regarding Arsenal youngsters, with Nicklas Bendtner and Seb Larsson previously shining at St. Andrew's, while Jon Toral is currently there now.
But the main incentive for Arsenal to loan Iwobi to Birmingham is talented coach Gary Rowett.
The former Burton Albion boss has done a wonderful job in the West Midlands and he has played a huge role in Viv Solomon-Otabor and Demarai Gray’s rise to prominence.
Rowett joined Birmingham when they were fighting near the bottom of the Championship, and within 12 months he has completely transformed them into a team looking at making the playoffs.
The injury to Clayton Donaldson leaves them short up top, and as per the reports it’s looking like Iwobi has been targeted as either a potential replacement or somebody to supplement the likes of Gray.
With the chance of competitive action for a team vying for the playoffs, Birmingham would represent a great option for Iwobi and Arsene Wenger would be wise to seek a potential loan deal.