UK classifies $1.3bn in Covid ‘bounce back’ loans as suspected fraud

The UK government is set to release data showing around £1.1bn in small business loans ($1.27bn) provided under a Covid-19 emergency lending scheme have already been classified as suspected fraud, a source told Reuters.

Unpublished data from the UK’s Department for Business, Energy and Industry (BEIS) gives the first firm indication of likely levels of fraud in the scheme, which has come under intense scrutiny for the quality of checks on borrowers.

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UK banks have provided a total of £47bn in government-backed ‘bounce back loans’ from May 2020 to struggling small businesses hit by Covid-19 lockdowns.

A release date for the latest report has not been set and the data is yet to be finalized, said the source with direct knowledge of the data.

The £1.1bn represents the current level of loans that have been flagged as suspicious, and more may come to light.

“We continue to crack down on Covid Support Scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers,” a government spokesperson said.

The support programs were implemented quickly to save jobs, the spokesperson said, adding that fraud estimates would differ from any losses as some funds could be recovered or refunded.

The government’s current central estimate for repayment loan fraud is a final total of £3.3bn, or 7.5% of total loans, the spokesperson said.

In addition to the alleged fraud, the banks demanded £2.6bn in government guarantees for defaulted loans, up from £1.6bn in March this year, the source said.