Over £1bn of fraudulent bounce back loan applications uncovered
More than £1 billion worth of fraud has been identified by the Public Accountants Committee in the government’s coronavirus Bounce Back Loan Scheme (BBLS) during the first six months of the scheme being in operation.
In a letter to the Public Accounts Committee (PAC), which has been looking at the operation of the BBLS, Catherine Lewis La Torre, CEO of the British Business Bank, provided fraud statistics across all BBLS lenders, as of 20 October.
These statistics show 26,933 fraudulent loan applications have been detected, with a value of £1.1 billion.
The scheme was announced on 27 April to quickly provide loans of up to £50,000, or a maximum of 25 per cent of annual turnover, to registered and unregistered small businesses in order to support them financially during the pandemic.
Preliminary estimates from the Department for Business, Energy and Industrial Strategy (BEIS) and the British Business Bank suggested that because of credit and fraud risks, 33 per cent to 60 per cent of borrowers may default on the loans.
Analysis by the National Audit Office (NAO) revealed that, assuming the scheme lends £43 billion, this would imply a potential cost to government of £15 billion to £26 billion.
Earlier this month, the government announced that it is extending the deadline on a number of loan schemes giving UK firms until the end of January to apply for BBLS, the coronavirus business interruption loans (CBILS) and the CLBILS scheme for larger firms.