Up to £500m in Covid loans given to 10,000 businesses that later went bankrupt
The shocking sum comes on top of the £5.8bn extracted by fraudsters from Covid emergency schemes like Leave and Eat Out To Help Out
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Up to £500million in Bounce Back Loans have been given to companies that later went bankrupt.
Nearly 10,000 businesses have gone out of business or gone into administration after taking taxpayer-funded money to help them through the pandemic.
The staggering sum comes on top of the £5.8bn extracted by fraudsters from Covid emergency schemes like Leave and Eat Out To Help Out.
The new details emerged after the resignation of fraud minister Lord Agnew angered by the government’s failure to crack down on scams.
The Insolvency Service said it identified 9,733 businesses in England, Wales and Scotland which became insolvent between May and October last year after getting a Bounce Back loan.
The bank loans, which were fully guaranteed by the government, were intended to compensate businesses for reduced trade during the shutdowns.
Bosses could claim up to £50,000 or 25% of annual turnover.
Banks have been ordered to relax the usual controls. Many borrowers self-certify their financial status.
The scheme provided £47.4bn of credit through 1.6m loans. It is not known how much the government will recover. But as the banks will obtain repayment of failed loans from the government – in other words the taxpayer – it is likely that other creditors will take priority.
A government source said the average loan was well below £50,000 and the Bounce Back scheme had been a lifeline for more than 1,500,000 businesses.
A spokesperson added: “Companies are expected to do everything possible to repay loans. Most payments are made as scheduled.
The Treasury – lambasted by Lord Agnew as having ‘no knowledge or little interest’ in the fraud – wrote off £4.3billion in Covid scams.