According to data, the British government will soon make public, that approximately 1.1 billion pounds ($1.27 billion) in small business loans issued through the COVID-19 emergency financing program have already been labeled as possibly fraudulent.
The plan has come under fire for the caliber of the borrower checks, and the previously undisclosed data from the British Department for Business, Energy, and Industry (BEIS) provides the first concrete indication of possible fraud levels in the scheme.
From May 2020 to May 2021, British banks made ‘bounce back loans’ worth a total of 47 billion pounds to struggling small firms affected by COVID-19 lockdowns.
According to the source with firsthand knowledge of the data, no publishing date for the most recent report has been set, and the statistics are still being finalized.
The total amount of loans currently considered questionable is 1.1 billion pounds, though more may come to light.
A government official said, “We will continue to crack down on COVID support scheme fraud and will not allow those who aim to deceive consumers and taxpayers.”
According to the spokesperson, support plans were swiftly put in place to save jobs, however, estimates of fraud will differ from actual losses because some money may be recovered or refunded.
According to the spokesman, the government’s official estimate for bounce-back loan fraud currently stands at 3.3 billion pounds or 7.5% of the total amount lent.
In addition to the alleged fraud, banks reportedly requested government guarantees totaling 2.6 billion pounds for loans that were in default, up from 1.6 billion pounds in March of this year.
In comparison to 350 million pounds in claims as of March 31, according to data that was most recently published on July 28, the source said that an additional 1.2 billion pounds in such claims have been paid out.
According to the statistics from the source, loans totaling 28.3 billion pounds are being repaid on time, and 4.7 billion more have already been repaid in full.
As the government set it up with little checks on borrowers in order to get cash out rapidly, the plan has long been plagued by worries over a high risk of fraud.
Under the program, 1.6 million participants received loans of up to 50,000 pounds each. As much as 4.9 billion pounds in loans could ultimately be fraudulent, the Public Accounts Committee of Parliament warned in April.
The government failed to protect against fraud in the scheme, according to the National Audit Office, which reviews public-sector spending. This left the government vulnerable to billions of pounds in damages.
Theodore Agnew, a junior government minister, resigned in protest in January over how the scam was handled, calling the measures to halt fraudulent usage of the loans “woeful.”
