Its Farnborough office has been closed and all 20 staff have been made redundant.
It first planned to become a lender in 2007 when former GMAC-RFC chairman Stephen Knight revealed plans to launch Checkmate Mortgages.
It rebranded to Portillion in February 2010. In February 2011 Knight decided to step down because he had a brain tumour. The firm made its application to the FSA to become a lender in May 2011.
Portillion had set an original launch date of January 1 2012 and planned to offer a range of savings products direct and mortgages through brokers. It had secured more than £58m in investment from SBI Group of Japan.