UK’s Tide breaks ranks on crisis loan payment deferrals


The government announced new “Pay As You Grow” measures in February, offering struggling companies the chance to push back repayment on state-backed loans to 10 years from six, among other options.

Tide’s decision not to offer PAYG is an early indication of how lenders are making difficult choices between their own commercial interests and those of small businesses, as unprecedented levels of support for such firms are withdrawn.

It also highlights the risks for customers of taking out loans from fintech companies. Online lending platforms such as Tide have grown in prominence in Britain in recent years, using digital apps that often provide slicker service than mainstream banks to reach a wide customer base. But some app providers do not have banking licences and in Britain, they did not get access to cheap central bank funding during the pandemic.

In a statement on its website, Tide said it would not offer PAYG because it didn’t have government support that would help it extend the loans.

More than 1.5 million so-called “bounce back” loans (BBLS) worth over 46.5 billion pounds ($64.9 billion) have been granted, but as much as 35-60% are forecast to default, according to government estimates.

Tide had already faced criticism over its handling of BBLS last year, after a funding crunch forced it to halt lending under the scheme.


Official data last month showed insolvencies in England and Wales fell to their lowest level in more than 30 years early this year, but more companies are expected to struggle as state support for the economy is rolled back.

Finance minister Rishi Sunak said the additional PAYG support would give firms “breathing space to get back on their feet”, when the scheme was announced in February.

Tide has provided at least 50 million pounds of BBLS, according to media interviews with its Chief Executive Oliver Prill last year. More recent data was not available.

“Tide has taken the difficult decision to not offer PAYG, as we would be unable to fund an extension for all BBLS members,” it said in the statement.

Martin McTague, vice chairman of the Federation of Small Businesses, said the lender’s move was “deeply concerning”.

“The ability to extend grace periods, or spread bounce back repayments over longer periods of time, will be important to the survival of a lot of firms,” he said.

While lenders are not obliged to provide such support, many firms had counted on it, especially since Britain recently pushed back the June 21 full reopening of its economy, he added.

A spokesperson for Tide declined to comment, referring Reuters to the statement on the lender’s website.

The government-owned British Business Bank, which runs BBLS and PAYG, said: “There is no requirement for a borrower to be in financial difficulty to request Pay As You Grow so the expectation is that it will be offered should the customer request it.”