Tide, the UK business banking fintech, has had to freeze its lending services after telling customers that its anticipated funding has fallen through.

CEO, Oliver Prill, published an open letter on 8 June. He revealed that the fintech has been trying to secure funding over the last month from “a number of financial institutions”.

Tide is “in conversation” with its contacts at HM Treasury

The intention was to use the funding to lend to more businesses on its waiting list for a Bounce Back Loans Scheme (BBLS) grant.

BBLS

The grant allows small and medium-sized businesses (SMBs) to borrow between £2,000 and up to 25% of their turnover.

The maximum loan available is £50,000. The government guarantees 100% of the loan. This means that if the lender doesn’t collect the loan, the government reimburses the lender.

Interest is waived for the first 12 months, after which the interest rate is 2.5% a year.

Tide’s lending freeze

Prill said in his open letter that the design of the BBLS “doesn’t meet the requirements” of Tide’s prospective funding partners.

“Until this morning, we were hopeful that we could secure more funding for Tide Bounce Back Loans,” says Prill.

“We felt it was our responsibility to let you know as soon as we learned this news and that we’ve had to make the difficult decision to pause lending and close the waiting list.”

Call for direct government funding

Prill added that Tide is “in conversation” with its contacts at HM Treasury.

The fintech hopes to persuade the government to provide the necessary funding for the BBLS directly to lenders.

This would see alternative lenders bypass the stage which currently sees them gather capital from investors or other financial institutions.

Read next: Six new lenders accredited for UK CBILS

Source: https://www.fintechfutures.com/2020/07/tide-freezes-lending-after-funding-falls-through/