The National Audit Office (NAO) has warned that up to 60% of emergency loans distributed under the government’s Bounce Back Loan Scheme may never be repaid.
Bounce Back Loans were designed to provide small businesses unable to obtain other pandemic-related funding, access to money quickly to help them survive the COVID-19 crisis. As a result, applications incurred lighter checks than other schemes, thereby making them more susceptible to fraud, organised crime and default. In addition, the NAO said the speed with which the scheme was initially rolled out heightened the risk of fraud.
A recent investigation by the BBC has revealed how fraudsters have used the scheme to access loans of up to £50,000. It unearthed evidence of over 100 bogus firms that scammers had established in order to make fraudulent applications using personal details stolen from innocent victims to set up fake companies.
It has also emerged that, two days before the scheme launched, British Business Bank CEO Keith Morgan wrote to Business Secretary Alok Sharma, warning that the scheme risked wasting taxpayers’ money as it was ‘vulnerable to abuse by individuals and organised crime.’ In total, NAO estimates suggest the taxpayer stands to lose up to £26bn on unpaid loans.