£640m fraudulently claimed from bounce back loan scheme
£640m-worth of loans issued via the government’s bounce back loan scheme were claimed fraudulently, according to official figures.
In total £4.1bn was issued through the scheme as the government looked to support businesses hit by the Covid-19 pandemic, meaning close to £1 in every £6 paid by taxpayers was illegally claimed.
The government figures also showed that £11bn of the £77bn paid to businesses through all the emergency support schemes – including the coronavirus business interruption loan scheme (CBILS) – has defaulted or is in arrears.
According to a report in The Times, Starling Bank issued the highest proportion of loans as “suspected fraud”, with at least £695m of the £1.6bn in bounce back loans issued by the online bank in arrears or default.
In December, Starling Bank chief executive Anne Boden told the public accounts committee that 34.3 per cent of the state-backed bounce back loans it issued during the pandemic are “not performing” and are at risk of default.
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The government figures, which cover the period to the end of December, covers the £46.6bn bounce back loan scheme, the £25.9bn CBILS and a £4.5bn version of CBILS aimed at larger businesses.
Metro Bank is another lender that appears to have a high proportion of non-performing loans, according to The Times’ report. These total at least £529.4m, compared with £717.4m of loans that are on schedule or repaid.
Meanwhile, former peer-to-peer lender Funding Circle received £87.9m in state guarantees for 706 defaulted loans under CBILS, according to the data. It represents close to two in five of all guarantee claims made on the scheme so far by number, and more than £1 in every £3 by value.
NatWest, the largest user of the scheme, has been paid £27.7m under the guarantee across 127 defaulted loans.
Businesses could borrow up to 25 per cent of annual turnover up to £50,000 through the bounce back loan scheme, with the loans fully underwritten by the government.
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