Following approval by the British Business Bank as  CBILS lender, Starling Bank – a digital-only bank, has issued a statement. Starling is a fully licensed and regulated bank, founded by Anne Boden, former Allied Irish Banks COO, in 2014.

Helen Bierton, Starling Bank’s Chief Banking Officer, said:

“Business owners who have poured their heart and soul, not to mention their life savings, into successful enterprises are crying out for help. The important thing now is to get money into their hands. We believe that CBILS is the best way to do this. We’re delighted to be working with the British Business Bank as a CBILS lender.”

The government-backed Coronavirus Business Interruption Loan Scheme(CBILS) will enable term loans between £5,000 and £250,000 to small and medium-sized enterprises (SMEs) that are struggling financially as a result of the coronavirus emergency. Starling Bank said it will shortly confirm the date from which it will be ready to start receiving CBILS applications.

Under CBILS, the first 12 months of interest on the facility and any arrangement fees will be paid by the UK government as a Business Interruption Payment. Smaller businesses will benefit from no upfront costs and lower initial repayments.

Importantly, no personal guarantees will be required, so borrowers and guarantors will not have to put up their principal private residence as security.

SMEs with an annual turnover of up to £45 million can apply for a Starling CBILS term loan, if they meet all of the following criteria:

• Limited Company or Limited Liability Partnership
• Trading for more than 18 months
• Have a good credit history with no arrears or defaults

Additionally, Starling is also offering business overdrafts of £1k to £150k under the Scheme, with Sole Trader businesses also eligible to access a business overdraft up to £25k. Loans are available for terms of up to 5 years. Overdrafts are a revolving credit facility and renewable annually.

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NatWest has today announced a partnership between its digital business bank Mettle and cloud-based accountancy platform FreeAgent.

The partnership will see SMEs save up to £150, or the minimum cost of an annual subscription to FreeAgent.

To get the freebie, businesses will have to sign up to link their Mettle accounts to FreeAgent and make at least one transaction a month.

By linking their accounts, SMEs will be able to see accounting results in real-time which will help to reduce the risk of admin errors or duplications.

Ed Molyneux, CEO of FreeAgent, said: “We’re really excited to be working with Mettle and providing small business customers with the most intuitive way of staying on top of their finances.”

Ken Johnstone, chief product officer at Mettle, added: “We’re thrilled to be launching an innovative partnership with FreeAgent that will not only allow businesses to have greater insight and control over how they run their business but will do so completely free of charge.”

The partnership is the most recent concession NatWest has given to smaller businesses during the coronavirus outbreak, just under a month ago the bank pledged £5bn to SMEs for coronavirus support. 

NatWest is also hoping to get a slice of the £330bn promised by the Government to help SMEs stay afloat during the current economic downturn caused by coronavirus.

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Challenger bank Judo has secured a $500 million investment from the government to help provide loans to small businesses.

The government announced on Thursday it would invest an initial $250 million into Judo’s lending warehouse through the Australian Office of Financial Management’s (AOFM) Australian Business Securitisation Fund and a further $250 million through its recently announced Structured Finance Support Fund (SFSF).

Judo co-founder and co-chief executive David Hornery said the $500 million investment came at a crucial time for small businesses around Australia, many of which were battling for survival.

“It is really about underpinning our capacity to provide funding to SMEs at a time when it has never been more important,” he said. “These two entities are coming together to provide a substantial and valuable injection to the SME community.”

The investment from the AOFM makes Judo the first recipient of capital from the government’s $2 billion small and medium enterprise funding scheme that was unveiled in November 2018.

The radical federal government intervention was designed to strenghten competition with the big four banks, while offering more options for businesses that struggle to secure loans.

The $2 billion comes from Commonwealth bonds and the investments are treated as assets in the federal accounts, which means the scheme does not increase net debt but exposes the government to bad debts.

In addition to these funds, the investment in Judo also comes from the government’s $15 billion SFSF, which was announced by Treasurer Josh Frydenberg on March 19.

The fund was established with the aim of ensuring continued access to funding markets impacted by the economic effects of the coronavirus pandemic.

Judo was granted a full banking licence in May last year and recently secured a new $350 million line of credit from Citi.

Mr Hornery said the bank had a strong pipeline of demand and had built its deposit book to almost $1.4 billion.

Nevertheless, he said the government’s investment would bolster Judo’s capacity to be in the market at a time when its customers needed it most.

“The government has made a whole series of substantial and targeted interventions in the market,” he said. “This is a really substantial additional signal of support by the government of the sector.”

Mr Hornery said the government’s investment was material and targeted and allowed Judo to really accelerate its growth in the market.

“It has never been more important to provide liquidity to SMEs, both funds have acted substantially and decisively to ensure that liquidity is extended in an expedited fashion,” he said.

Mr Hornery said the first tranche of funds would be available “pretty much straight away” and would have a direct and positive impact on small and medium businesses.

The AOFM is expected to field funding requests from a host of fintechs including Prospa, Zip and Flexigroup.

The office initially said it would call for a second round of proposals before July 1, 2020 but a spokesperson said it now intended to make an assessment of market conditions in early July 2020 before proceeding.

Judo was started by Mr Hornery and co-founder Joseph Healy after the two former National Australia Bank executives had the idea for a challenger bank over Friday night beers at Sydney’s Greengate pub in 2013.

The pair saw an alternative to what they characterised as “industrialised” banking at the big four banks and have instead focused on more old-fashioned banking based on relationships with small businesses.

Mr Hornery said Judo’s 60 bankers had been busy sitting down with each of their small business customers since the coronavirus pandemic hit.

“For us relationship banking sits at the core of what we do and the ability to sit with work and provide advice and counsel to customers at a time like this has never been more important,” he said.

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After over a year of private testing, digital bank Monzo has at long last launched its current account for businesses.

The move comes amid escalating competition in the SME banking sector, with rivals Starling and Tide boosted by huge cash injections from the Banking Competition Remedies fund last year.

Monzo’s offering comes in two halves, a free Business Lite account which includes a basic business account, receipt scanning and web access, and a £5/month Business Pro account that adds tax pots for automatically saving towards a tax bill, invoicing, multi-user accounts and more.

“We’ve heard how difficult it is to find a business account that delivers what businesses need—and have also heard over and over that it can take days, and even weeks, to get an account up and running,” said Monzo CEO Tom Blomfield today on the launch. 

“Companies need stress-free banking that just works, so they can focus on what’s important—growing their business.”

Monzo has also partnered with accountancy giant Xero for a 6-month free accounting subscription for new Xero customers, available only for its Business Pro customers.

The digital bank says it has been building and testing its Business accounts with over 2,500 business owners over the last 12 months, who it’s worked with to develop the account.

Whether SME banking needs yet another digital bank to wade in, we’ll have to wait and see, but given the current economic crisis facing businesses they’ll likely savour any help they can get right now.

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NorthOne, a digital challenger bank focused on small businesses, announced this morning a $21 million Series A raise.

Boston-based Battery Ventures led the round, which included participation from Redpoint Ventures and Tom Williams. The financing brings NorthOne’s total raised since its 2016 inception to $23.3 million.

New York-based NorthOne aims to provide small business owners (such as hairdressers and bakers), freelancers and startups  with an easy-to-use banking application. The company says its offering includes multi-language customer service teams, enhanced deposit and payment features for cash-reliant businesses, and “seamless” overseas vendor payments, among other things.

CEO Eytan Bensoussan co-founded NorthOne with his own upbringing in mind.

“I grew up in a family of small business owners where everybody would be going through occasional painful cycles of closing books and chasing invoices,” he told Crunchbase News. “So that in many ways influenced who we are trying to target.”

NorthOne spent a few years building out the product, conducting research with 100 small business owners across America, undergoing compliance testing and “finding the right partners.”

The startup launched its API-enabled, mobile-first banking platform in private beta last June, at which time Bensoussan said, the company already had a waitlist of 100,000 businesses requesting accounts. The startup had accomplished all its “in beta goals” by August, so went public on the app store at that time. In November, it released on Google Play. It currently has the “bare bones” of a desktop product in place. It serves as a SaaS (software as a service) operator, offering monthly subscriptions.

“The role of a bank is not to just keep money safe and move it around occasionally,” Bensoussan said. “We want to go beyond banking and into the back office of companies and take the busy work right off their plates so the owners can have more time to focus on building their business.”

The company’s strategy is to “uniquely” address each community, incorporating new products and services based on the differing needs of businesses depending on their markets.

Specific features include branch-free banking; dedicated sub-accounts for things like rent and payroll; mobile check deposits; integrations with software such as Quickbooks and Expensify; and the ability to give your bookkeeper “read access.”

Growth

Since its launch last August, NorthOne has been growing nearly 130 percent month over month and counts “thousands” of small businesses as customers, according to Bensoussan. The company has grown its staff from about 12 a year ago to nearly 40 today.

“The kind of businesses we’re growing with are the kind I used to know growing up. They’re the core of industry across America, the ones you walk by on the way to work,” he told me. “That really means a lot to me personally.” Many have 20 or fewer employees. Some of the NorthOne’s largest markets are in the South and the Midwest.

NorthOne also aims to visualize cash flow for its customers so they can “prevent oops moments” such as buying a $10,000 oven when the money may not all be there.

“The vast majority of failures are due to cash flow mismanagement and illiteracy,”  Bensoussan said. “That’s the problem we’re attacking by trying to educate in a non-intimidating way and making it super easy to understand the health of a business, and get that information in real time.”

Looking ahead

The company plans to use its new capital to expand its marketing efforts and speed up the growth of its customer acquisition programs. It also wants to hire more product, software engineering and customer service staff.

All of what NorthOne is doing sounded a bit like what an Austin-based SaaS operator, ScaleFactor, is working on as well. (I wrote about that company’s raise last year.) ScaleFactor is focused on building a back office for small- and medium-sized businesses.

So I asked NorthOne how similar (or not) they are.

Its answer: “ScaleFactor can be a great solution for bigger companies that have more complicated expense management needs. For most small businesses, the burden doesn’t come from expense management but from the burden of daily banking. So while Scalefactor’s product is awesome, it isn’t set up to replace their bank account.”

That said, NorthOne is apparently compatible with ScaleFactor’s software.

Meanwhile, Battery Ventures’ Shiran Shalev said his firm has been closely following the rise of challenger banks in Europe.

“It’s inevitable that similar disruption would hit the U.S. market next–particularly in business banking,” said Shalev, who is joining NorthOne’s board, in a written statement. “We believe NorthOne is well on its way to building a leading challenger bank for SMBs in the U.S., and are excited to partner with management to realize this vision.”

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Tide, the digital business banking platform, has today announced that it is close to hitting 150,000 customers or 2.5 per cent of the UK’s SME market.

The news comes on the first anniversary of the partnership between Tide and ClearBank, the UK’s first clearing bank in over 250 years.

In February 2019, the partnership helped Tide to secure £60m for the RBS AlternativeRemedies Package.

Oliver Prill, CEO of Tide, said: “ClearBank and Tide have led the way in encouraging the growth of business banking in the UK, with almost 150,000 members signed-up to the Tide platform which has an extensive and growing range of products and services.”

Tide is now one of the largest digital business banks in the market and has seen its popularity grow through the launch of its paid premium accounts, a QuickBooks bank feed and the ability for businesses to sign up online.

Charles McManus, group CEO of ClearBank, said: “The ClearBank and Tide Business Banking proposition unites the UK’s leading challengers in business banking and banking infrastructure.”

“Now one year into our partnership, we are making strong progress on our commitments, bringing enhanced services and genuine competition to business banking for UK SMEs.”

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Tide, a UK-based neobank that services small- and medium-sized businesses (SMBs), has debuted a new expense management tool that enables users to upload an image of a receipt and automatically have the expense matched to a transaction made through their Tide account in real time, according to a press release sent to Business Insider Intelligence. A machine learning (ML) model matches the receipts to the transactions and gets more accurate each time the client uses it. The feature is being rolled out free of charge to all of Tide’s 140,000 clients.

The receipt importer will be beneficial to all of Tide’s clients, but will likely prove especially useful for very small business customers. SMBs spend nearly one-third (30%) of their time on administrative tasks that don’t actually contribute to their bottom lines, per data from Atomik Research cited by Tide, and more than half (54%) of Tide users surveyed by the neobank said that they store and manage physical receipts to hand over to accountants.

All of these businesses will benefit from a more intuitive way to handle their bookkeeping, though the smallest among them will benefit the most: These companies are the least likely to have staff on hand who can be dedicated to administrative or accounting tasks.

The new tool can help Tide enhance its value proposition as it grapples with fellow UK challengers for SMB customers:

• Starling Bank has been going all out to enhance the business marketplace it offers — which functions more or less like an app store for business-oriented financial products — by expanding the tools available several times in the past few months alone. Starling also added more flexibility to its own banking offerings for businesses last year, introducing a new dual-currency debit card and business euro account as well as a web portal to give businesses another way to manage their accounts beyond its mobile app.
• OakNorth has enjoyed impressive success so far as well. The challenger offers large loans — up to $80 million — to businesses at very competitive rates. As of its 2018 annual results filing (its most recent), it had lent $4 billion to UK businesses without any defaults and, even more impressively, revealed a 220% increase in pre-tax profits to $46 million, per Forbes. This is no small feat, given that profitability is a problem that continues to vex the vast majority of neobanks.

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Judo Bank announced that it has hit $1 billion in term deposits in its first nine months of operation, Mozo reports.

And the neobank has been actively putting those deposits to work, announcing just a few days ago that it has lent more than $1 billion to small- and medium-sized businesses, according to News.com.au. Going forward, Judo anticipates an acceleration in deposit growth, with cofounder and co-CEO Joseph Healy expressing confidence that Judo will hit $3 billion in deposits by this time next year.

While the neobank is still well behind the major Australian incumbents in terms of deposits, the speed with which it’s reached the $1 billion milestone is impressive. The “Big Four” incumbent banks in Australia (CommBank, NAB, ANZ, and Westpac) are massive — NAB, for example, boasts a whopping $424 billion in customer deposits, and ANZ has a small-business loan book of $15 billion.

But contrast Judo, which only became an authorized deposit-taking institution in April 2019, with another neobank and its blistering trajectory becomes clearer: In the full year between February 2018 and February 2019, major UK neobank Monzo only grew deposits by £390.5 million ($512.8 million), from £71.3 million ($93.6 million) up to £461.8 million ($606.4 million)

Judo attributes its quick deposit growth at least in part to the higher interest rates it pays on deposits, which bodes well for the growth plans of other Australian neobanks. Judo says that its interest rate of 1.95% on six-month term deposits is significantly higher than major banks’, which offer 1.25%. It also says that paying this above-market rate has helped it raise its current deposit total.

This is good news for the future prospects of its fellow Australian neobanks like Xinja and Volt, as they both offer high-yield savings accounts boasting interest rates that are stronger than those offered by the Big Four banks. If strong rates on term deposits are driving deposits and customer acquisition for Judo, generous rates on regular savings accounts could similarly help other Australian neobanks steal customers from the Big Four.

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French startup Qonto has raised a $115 million Series C funding round led by Tencent and DST Global. Today’s news comes a few days after another French fintech startup, Lydia, raised some money from Tencent.

Existing investors Valar and Alven are also participating in today’s funding round. TransferWise co-founder Taavet Hinrikus and Adyen CFO Ingo Uytdehaage are also joining the round. Qonto  says it represents the largest funding round for a French fintech company.

Qonto is a challenger bank, or a neobank, but for B2B use cases. Instead of attracting millions of customers like N26 or Monzo, Qonto is serving small and medium companies as well as freelancers in Europe.

According to the startup, business banking in Europe is broken. The company thinks it can provide a much better user experience with an online and mobile-first product.

The company has managed to attract 65,000 companies over the past two years and a half. The product is currently live in France, Italy, Spain and Germany. In 2019 alone, Qonto managed €10 billion in transaction volume.

With today’s funding round, the company plans to double down on its existing markets, develop new features that make the platform work better in each country based on local needs and hire more people. The team should grow from 200 to 300 employees within a year.

Qonto obtained a payment institution license in June 2018 and has developed its own core banking infrastructure. Around 50% of the company’s user base is currently using Qonto’s own core banking system. Others are still relying on a third-party partner.

Moving from one back end to another requires some input from customers, which explains why there are still some customers using the legacy infrastructure. Over the coming months, Qonto plans to launch new payment features that should convince more users to switch to Qonto’s back end.

Even more important, Qonto plans to obtain a credit institution license, which could open up a ton of possibilities when it comes to features and revenue streams. The company says that it should have its new license by the end of the year.

For instance, you could imagine being able to get a credit card, apply for an overdraft and get a small loan with Qonto.

Compared to traditional banks, Qonto lets you open a bank account more easily. After signing up, Qonto offers a modern interface with your activity. You can export your transactions in no time, manage your expenses and get real-time notifications. Qonto also integrates with popular accounting tools.

When it comes to payment methods, Qonto gives you a French IBAN as well as debit cards. You can order physical or virtual cards whenever you want, customize limits and freeze a card. Qonto also supports direct debit and checks. Like many software-as-a-service products, you can also manage multiple user accounts and customize permission levels.

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Singapore-based Arival Bank, a fintech bank for small and medium-sized enterprises and crypto businesses, has applied for a digital wholesale banking license in the city-state.

Arival was founded in 2017 as an internal venture spun out VC firm Life.Sreda. The company is led by CEO Vladislav Solodkiy, chief financial officer Igor Pesin, and chief operating officer Jeremy Berger, who are all part of the VC firm’s leadership team.

With its bid, Arival plans to focus on serving what it calls “abnormal” clients or higher-risk customers, who usually get turned down by more traditional banks, according to a Business Times report.

“The focus on ‘abnormal’ or underbanked SMEs gives us the opportunity to not compete with other digital or traditional banks, avoid spending money on advertising or customer acquisition, and allows us to focus on margins,” Berger told the Business Times.

The digital bank hopeful also said it plans to aggregate fintech products from third-party service providers and make them available on a single platform powered by open application programming interfaces. In addition, it looks to offer a banking-as-a-service platform that would help other fintech firms launch.

Berger noted that the company’s “compliance-as-a-service” product, which provides easily integrated compliance solutions, also serves as a key differentiating factor in favor of Arival.

According to its website, Arival is not a bank yet, but it has applied for a US-based international banking license that is on track to be granted this year. Berger told the Business Times that the US license, which is in the final stages of receiving preliminary approval, will be “complementary” to the Singapore license.

“It gives us a unique entry to the US banking market as well, and allows us to contribute to an ecosystem that is in need of a natural remedy for economic boost such as fintech,” he added.

In addition to the US and Singapore, Arival has also started the application process for a similar license in Europe and looks to receive it by the end of the year.

Arival joins a growing list of companies that have announced their Singapore digital banking bids: Grab and Singtel, Ant Financial, Sea, and an Enigma-led consortium, among others. Singapura Finance and digital payment startup MatchMove Pay have also reportedly teamed up to apply for a digital full bank license in the city-state.

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