Starling Bank said to be eyeing pair of grants as it looks to help further its support of SMEs

UK challenger bank Starling Bank is reportedly looking to raise yet more funding this year, with the hopes to create more products for small and medium-sized businesses (SMEs).

The FinTech is applying for grants of £35m and £25m from the Banking Competition Remedies (BCR), which has already deployed £100m into the bank to date, according to a report from Yahoo Finance UK. BCR was established to implement the Alternative Remedies Package of measures agreed between the UK Government and the European Commission.

Speaking to Yahoo, Starling CEO Anne Boden said, “We are doing well and therefore we believe it’s in the interest of competition in the UK for us to be given an additional grant of £35m in order for us to be competitive in new sectors of SMEs.”

If the bank is able to pull in this extra capital, it is planning on building more technology to reach more small businesses, particularly non-profits and companies with complex ownership structures, the article states.

Starling previously received £100m from BCR last year. The capital was put towards the development of its technology and enhancing its services aimed at SMEs.

The FinTech has released a handful of new services since then designed to help SMEs. Last year, Starling launched an online banking service aimed at helping SMEs better manage their bank account.

Its tool lets users set up payments, add payees, edit standing orders, monitor bank statements and transaction lists in real-time, view and export statements, track spending on rent, travel and supplies, lock business cards, and easily make savings.

In February 2020, the bank also expanded its business marketplace with the addition of three new partners to help small businesses get access to more services.

Speaking to Yahoo, Boden said, “We’re very pleased with what we’ve done,” Boden said. “We’ve managed to build a very successful, high-growth SME business, we now have something like 3% of market share and we’re a safe pair of hands to be honest.

“We have over delivered on everything that we’ve promised and we feel as if that next stage for us now is to put ourselves under the next level of scrutiny.”

These new grants have come after Nationwide and Metro Bank have handed money they were initially given by BCR, the article claims. The article claims, the two banks have handed back a combined total of £100m, with Nationwide blaming Covid-19 for disrupting its growth plans and Metro Bank suffering errors with accounting, which has impacted its share price.

Starling is raising a lot of money at the moment and has already closed £100m in funding this year. The bank closed a £40m investment from JTC and Merian Chrysalis Investment Company in May to support growth efforts and provide additional support to business customers impacted by the coronavirus pandemic. The bank also raised £60m from the same investors back in February.

Despite the bank hoping to be the saviour for SMEs, they are not in everyone’s good books.

Earlier in the year, Starling was approved by the British Business Bank to serve as a lender of the government-backed Coronavirus Business Interruption Loan Scheme (CBILS). The scheme gives Starling the ability to deploy term loans between £5,000 and £250,000 to British SMEs struggling financially because of the coronavirus pandemic. Companies accepted do not have any interest  for the 12 months of interest and arrangement fees are paid by the UK government.

However, Starling came under fire in May when 2,900 business owners saw their applications declined. With a lot of businesses struggling from the pandemic, many were counting on the loans to help them get through. This led to many business owners speaking out on Twitter about their disgust.

“[You] are like the ice cream man with his chimes on, only to find out he’s got no Mr Whippy to sell only ice pops but to get the ice pop you have to sing the National Anthem backwards. Then he tells you he’s ran out of ice pops,” one rejected business owner wrote on Twitter.

The bank later issued a response to its rejections, stating that “The decision to decline these applications was not taken lightly.” Boden said that key to the decision was that businesses could not apply for a loan under the scheme with another bank while they were still being processed “and therefore, we felt we should decline as quickly as possible all applications that we were unlikely to accept.”

This was not enough and Twitter users continued to express their outrage at the bank declining so many applications. Following the aftermath, the bank stated it would look into what else it can do to help resolve some issues.

In a Tweet it said, “Hi everyone, we want you to know that we’re listening. We know some of you are frustrated, and lots of you have questions about the BBLS. So we’re currently working with the scheme authorities to get some guidance on a way forward.”

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