Tide says £100m+ fundraise is needed to continue Bounce Back Loan approvals

Tide is in discussion for a funding round worth “hundreds of millions of pounds” which is needed for the lender to continue distributing government-backed Bounce Back Loans.

In an open letter yesterday CEO Oliver Prill explained that while the loans are 100 per cent backed by the UK government “the loans aren’t funded by the Government.” 

“The Government doesn’t provide us with money to lend to borrowers. This affects how much we can lend. We – just like all accredited lenders – have to source the funds to lend as loans.”

Which has meant that Tide’s Bounce Back Loans have reached the £50m mark “a significant amount for the size of our business”, but the SME banking service is struggling to lend more with the cash reserves it has.

Unlike rival Starling,Tide doesn’t hold a banking licence, meaning it can’t lend out customer deposits and instead must fund all its loans from its own balance sheet.

“We’re now in discussions to raise hundreds of millions of pounds more. We hope to have this funding agreement in place soon and we’ll then be able to offer loans to many more of you,” said Prill.

“We continue our efforts to raise the funding to lend through the scheme but, as we said when members signed up for the waiting list, unfortunately we can’t guarantee that every eligible business that joins our list will receive a Tide Bounce Back Loan.”

In conclusion, Prill writes "we encourage members to consider other options as well as a Bounce Back Loan from Tide."

Capital has become increasingly scarce in the post-Covid world, and many alternative lenders like Tide have found themselves with the customer base and technology to deliver record lending, but without access to the funding lines needed to enable it.