Banks were able to prevent more than £1bn in Covid-19 support loans from being paid out to scammers, according to official data.
The government-owned economic development bank the British Business Bank told public accounts committee MPs that lenders dismissed 26,933 Bounce Back loan applications over fears they could be fraudulent.
Go deeper with GlobalData
This means that fraudsters have been prevented from pocketing £1.1bn from the nearly £40bn scheme.
Sarah Munby, permanent secretary at the Department for Business, Energy and Industrial Strategy, told the MPs: “We were consciously understanding that there would be fraud because of choices made about the design of the scheme.”
Only rudimentary checks
The Government has previously implied the scheme could end up costing the taxpayer between £15bn and £26bn, in part because of fraud but also due to defaulted loans.
Banks were told to only perform the most basic checks on the businesses they were lending to under the scheme. The priority was not to stop fraud, but to move billions of pounds out the door.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataFilling a gap
The scheme was launched in May after the Government was told other loan options were not reaching some of the smallest businesses.
The Bounce Back Loan Scheme (BBLS) provides financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the Covid-19 outbreak and that can benefit from £50,000 or less in finance.
The scheme is a part of a wider package of government support for UK businesses and employees. Read more at the Government’s Business Support website.
Full government-backed guarantee
BBLS is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website.
A lender can provide a six-year term loan from £2,000 up to 25% of a business’ turnover. The maximum loan amount is £50,000.
The scheme gives the lender a full (100%) government-backed guarantee against the outstanding balance of the facility (both capital and interest). The borrower always remains fully liable for the debt.
