ClearBank & Tide granted £25m to help UK SMEs

ClearBank, the cloud-native clearing bank, in partnership with Tide, the UK’s leading business banking platform, have been awarded £25m to help UK SMEs turn recovery from the coronavirus crisis into a growth opportunity.

The funding will be used to provide financial support and products to help SMEs address the challenges they will face in the post-coronavirus and post-Brexit economic environment and to seize on the opportunities that come out of it.

ClearBank and Tide will provide support to SMEs in the current challenging environment and help them to capitalise on the government’s ‘levelling up’ agenda. The pair will help SMEs meet the accelerated demand for digital services and enable them to become more sustainable.

Building upon the market share gains ClearBank, in partnership with Tide have delivered over the last 18 months, the grant will enable both businesses to establish initiatives aimed at tackling barriers to competition in business banking and give SMEs the tools to turn crisis into opportunity. These include:

• Leveraging Open Banking to remove friction: Open Banking will be used as it was intended, allowing businesses to use an existing third party business current account on the Tide platform; both to make payments but also to use the rich set of tools available (e.g. invoicing, expense management). There will be no need for the existing current account to be moved to Tide, removing friction and leveraging Open Banking. SMEs will be able to move their business without moving their business current accounts.
• Improving funding opportunities with unparalleled access to debt and equity: The proposal acknowledges the fact that funding for SMEs needs to be addressed by matching their diverse needs with a broad range of options rather than more of the same balance sheet lending. Building on Pool A deliverables, ClearBank and Tide will partner with additional third-party lenders, make ‘beyond Open Banking’ data available through a Tide Lending API and build out proprietary lending with an overdraft product. For more complex lending, ClearBank and Tide will launch managed networks, for equity solutions and Angel and VC investors.
• Help SMEs become more digital, supporting digital payments and business development: ClearBank and Tide will introduce request to pay (eg via embedded invoices), confirmation of payee and digital cheques. For B2B members Tide will help them grow their business by creating and curating a digital member directory with public profiles to advertise services and by building a managed services network for accountants and payroll providers.

Charles McManus, co-founder and CEO of ClearBank, said: “The pandemic has created deep-seated uncertainty, particularly among UK SMEs who are among the hardest hit. This grant will help us ensure SMEs not only survive this period but are able to seize the opportunities available and thrive in the long-term. By securing the additional funding from Pool E, we’ll be able to have even more of an impact, building on the agility and efficiency we have shown so far in our on-target Pool A delivery.

“By committing to integrate with at least 25 SME partners, we’re opening up opportunities for innovative businesses to provide valuable changemaking solutions. We believe these partnerships, combined with a number of powerful new tools, will further enable us to offer a truly compelling alternative to the high street banks.”

Oliver Prill, CEO of Tide, said: “We are thankful that the BCR has granted our partnership with ClearBank the opportunity to create a genuine alternative to the oligopoly that has dominated the UK SME market for too long.

“Competition and choice in the business banking space is more important than ever and this grant will help us to address it urgently. Switching accounts is sticky, with old barriers remaining and the government’s response to the coronavirus crisis reinforcing them.

“For example, repayments under the critical Bounce Back Loan Scheme will link millions of SMEs to the big five for many years. ClearBank’s world-class payments infrastructure combined with Tide’s unrivalled business banking platform mean that we can develop innovative ways to get around this, particularly by using Open Banking in the way it was intended.

“As well as removing friction, we will provide powerful attractors as an incentive for SMEs to switch to Tide. Crisis recovery can turn threats into opportunities and we have identified the key areas in which SMEs are threatened and have world-class solutions that will allow them to get back on their feet and come out stronger.

One immediate opportunity is for banks small and large, alternative lenders and commercial finance brokers to join the leading funding network we will be building.”