Covid loan fraud not as bad as feared, says British Business Bank chief
Fears that Covid loan fraud ran into billions of pounds are overblown, according to the chief executive of the British Business Bank.
The government delivered a number of loan schemes through the state development bank to help businesses during the pandemic. The most susceptible to fraud was the bounce back loan scheme, which offered loans of up to £50,000 that were fully underwritten by the government.
Around £46bn was delivered to 1.7 million businesses under the scheme, but the government said this year that up to £3.3bn of that could be lost to fraud.
In an interview with The Times, Catherine Lewis La Torre said that “the vast majority of borrowers that took out those loans” did so in good faith and have been paying them back, or have refinanced with their bank.
Read more: Funding Circle sees profits fall to £1.6m after Covid loan schemes end
Lewis La Torre dismissed claims previously made by Lord Agnew, a former Treasury minister, that the British Business Bank’s handling of loan administration during the pandemic was a “colossal cock-up”.
Lord Agnew resigned in January after the scale of Covid loan fraud emerged.
“It wasn’t that those concerns weren’t understood, it was just that, on balance, doing nothing and losing productive capacity of the UK economy, or doing something, there was really no trade-off,” said Lewis La Torre.
Read more: Director banned after taking out bounce back loans to repay ex
She claimed that if the loan scheme had moved any slower than it did, financial pressures on businesses would have caused “carnage in the economy.”
The Times interview came ahead of a British Business Bank statement on Monday (26 September) which confirmed the conditions for those businesses seeking to take out loans under the renewed Start Up Loans Programme.
Loans are being made available to businesses that have been trading for up to three years. Second issuances are also available to companies trading for up to five years.
Read more: Bounce back loan arrears worse than government admitted
“This extension of the programme will enable us to work with those businesses that had, perhaps, just got going when the pandemic hit, or are ready to consolidate and grow their businesses now that they are back on their feet,” Richard Bearman, managing director of Start Up Loans, said.
“We want to ensure that these businesses do not get left behind. Having delivered more than £904 million in loans highlights our continued efforts to help people from a diverse array of backgrounds achieve their business goals.”
Read more: Watchdog slams Bounce Back Loan fraud checks as “inadequate”
The British Business Bank confirmed to Peer2Peer Finance News that The Times interview was “accurately and directly quoted.”
