The UK’s largest banks have started sending letters to businesses that have taken out state-backed emergency loans to tell them that repayments will begin soon.
According to the Mail on Sunday, HSBC, Barclays, NatWest and Lloyds have begun to contact borrowers.
Businesses were granted an interest-free period of a year, which means those that took out loans when the scheme launched will need to start repayments in two weeks’ time.
Sources told the paper that banks may have to resort to heavy-handed tactics to ensure businesses repay and said that they know some firms could still be suffering from severe financial difficulties. One senior banker cited by the Mail on Sunday warned that some companies may have mistaken the money for grants and may refuse to make repayments.
Banks are investing heavily in debt recovery.
HSBC has allocated 400 staff to its collections team to discuss payment holidays, interest-only repayment periods and extending loan terms, according to the Mail on Sunday.
Metro Bank has hired new staff for a unit to support customers and NatWest is set to a new website dedicated to customers struggling with repayments.
The coronavirus business interruption loan scheme, bounce back loan scheme (BBLS) and coronavirus large business interruption loan scheme, which all ended on 31 March, deployed £75.1bn to companies, according to the latest Treasury data from last month.
There has been worries about businesses struggling to make repayments due to financial difficulty, and concerns about fraud, particularly with BBLS.
In his March 2021 Budget, Chancellor Rishi Sunak allocated £100m to a Taxpayer Protection Taskforce to crack down on fraudsters exploiting government support schemes.