The government loan scheme put together to help struggling small businesses has seen criminals steal more than £1.9bn from taxpayers.
Bounce Back Loans Scam
In May, the government had to get money to small businesses as quickly as possible, before tens of thousands of them went bust. But to do that, they had to make compromises on credit and fraud checks. This opened the doors to a whole range of problems – including fraud by organised criminal gangs.
The National Audit Office also says the UK’s five biggest banks will pocket nearly £1bn between them from the scheme. Under the Bounce Back scheme, small businesses can borrow up to £50,000. The government said it was aware ‘an element of fraud’ and had taken place and has tried to minimise losses through lenders’ background checks.
Bounce back loans are 100% government-backed loans of up to €56,000 (£50,000), and were introduced to mitigate the huge pressure on small businesses after the economy went into coronavirus lockdown. Loans do not have to be paid off for six years and are interest-free for the first 12 months.
The €42.5bn (£38bn) loan scheme is an extension of earlier offers which some businesses complained they could not access as the lending criteria were too strict. The NAO analysis said losses from the scheme are likely to reach “significantly above” normal estimates for public-sector fraud of 0.5% to 5%. In real terms, this would mean that more than €2.28 (£1.9bn) had been lost to criminals, leaving taxpayers out of pocket when they failed to pay the money back, it said.
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