The SME mobile banking service Tide has announced the launch of a scheme being described as ‘reverse loans’ for small businesses that is intended to help them build credit.

This scheme is being called Credit Builder for Small Businesses, and it will involve companies paying Tide micro loans of £240 in monthly instalments of £23. Once the full amount has been paid, Tide returns the £240 to the business, with the aim of the exercise being to make it easier for small start-ups with no loan history to show that they are able to handle regular payments.

The idea is that this will eliminate a major barrier to them being able to get loan financing from lenders by providing evidence of fiscal reliability. A detailed financial plan put together with the help of a small business accountant in Goole or any other area will also help them with that.

In announcing the scheme, Tide Credit Services VP Amit Kahana told AltFi that small firms were battling hard to recover from the Covid-19 crisis, before going on to add:

“Investing in growth is high on the list of priorities for many of these businesses but a poor or non-existent credit score is often a barrier to accessing credit options.”

Kahana pointed out that research by Tide had revealed credit scores of below 80 among 87% of the small firms that use the service. Its new scheme is a collaboration with the Experian credit bureau to reassure business owners that repayments will help with their credit ratings.