Tide shutters Bounce Back Loans as funding runs out

After hitting its £50m lending cap, Tide has been unable to raise additional capital to keep lending.

In a letter to his 150,000 SME customers yesterday, Tide CEO Oliver Prill wrote that the business banking provider would not be resuming its Bounce Back Loan Scheme (BBLS) lending. 

Tide initially slowed and then paused its bounce back loans last month after reaching around £50m in lending, at the time Prill said Tide would need to raise over £100m in additional funds to fulfil the volume of loans being requested by the fintech’s customers. 

Yesterday he informed Tide account holders that this had not been successful. 

Speaking to AltFi just after the letter went out Prill explained: “Having spoken to a lot of financial institutions it is just the unfortunate fact that at the very low margins that are available [with the BBLS], and even with us giving everything up, commercial funding will not be available for the bounce back loans.” 

In his letter Prill repeated that in the BBLS, while the loans are 100 per cent backed by the government, cash to fund the loans is not being provided by the state. 

“Our members cannot get bounce back loans from the big banks, because the big banks have effectively stopped opening business current accounts,” Prill told AltFi. 

“The conclusion we have reached is that we, and players like us, can only really serve BBLS customers if the funding is provided [by the government].” 

Tide says it will now campaign for the government to provide such funding, so that it can restart its bounce back lending. 

The British Business Bank responded to the news that one of its accredited lenders would have to stop lending saying the bank was “as disappointed as they are, that they have not been able to secure the funding needed to service all the demand for Bounce Back Loans from their members.” 

“Other lenders listed on our website may be able to help, although the setting up a new business account is likely to mean a longer application process.” 

Tide was accredited by the British Business Bank to join the BBLS in May, and the bank yesterday said that Tide had met its requirements at the time, that included having “sufficient capital available to meet their lending forecasts”, presumably which reached to the £50m Tide has so far lent. 

Before this approval, Prill argued adamantly that the bank’s speed of lender accreditation was too slow, saying "only two fintechs have been accredited by the scheme, suggesting that the British Business Bank has its prioritisation criteria wrong.” 

“The UK's thriving fintech sector has the technology to process applications and make decisions quickly, as well as having extensive reach - Tide has the widest SME reach of all non-accredited organisations, representing one in forty SMEs." 

Tide yesterday reiterated its comments from June, saying that customers needing funding should seek loans from other accredited bounce back lenders.