Counting Bounce Back Loans and CBILS lending, Starling Bank claims to have reached £600m of its BCR loan pledge

Digital bank Starling this morning claimed to have reached nearly 65 per cent of its commitment to lend £913m to UK businesses by the end of 2023.

The announcement came in Starling’squarterly update to Banking Competition Remedies Ltd, the grant fund which awarded Starling £100m last year with the bank pledging to hit the ambitious lending target.

Starling updated the BCR that it has now lent out £300m as part of the government-backed Bounce Back Loans initiative, and is currently deploying an additional £300m via Funding Circle under the Coronavirus Business Interruption Loan Scheme (CBILS).

"Starling has released an initial version of its unsecured business loan product. This system has allowed Starling to lend over £300m in its first week as part of the Bounce Back Loan Scheme of the British Business Bank.Starling processed 83% of decisions within 48 hours. This system will continue to be developed over the coming months," the bank wrote.

"Starling has also been accredited to lend through the Coronavirus Business Interruption Loan Scheme, and alongside its own originations, Starling has signed an agreement with Funding Circle to lend a further £300m to UK SMEs under the CBILS programme."

By comparison in February, at Starling’s last BCR update, the bank’s lending stood at just £1.03m.

Given its current pace, it’s possible that Starling could reach its 2023 £913m lending target this calendar year, albeit with the support of the government-backed schemes.

While government-backed lending is likely not what the BCR had in mind when it accepted Starling’s pledge, any market for traditional lending (i.e. not part of the government’s low-interest, deferred repayment loans) has evaporated in recent months.

It appears therefore that the BCR has given Starling the go-ahead to count these Bounce Back Loans and CBILS towards its targets, which is certainly a sea change from where the bank stood in February.

Starling also saw its SME customer number skyrocket during this period, reaching 120,328 business accounts when the report was filed (and indeed the bank just announced an even higher number today of 155,000), up from 89,291 in its February update, putting it well on track for its 2023 goal of 450,000 accounts.

Last night Starling also raised an additional £40m to bolster its SME banking arm, the bank said the latest funding will be used to “continue its rapid growth and help it provide much-needed support to small business customers who have been hit by the coronavirus emergency.”