Almost £ 20 Billion To Be Lost With Covid Loan Schemes – EzAnime.net

T

The government will lose less money from the three Covid loan schemes due to companies defaulting or committing fraud than was initially feared, new figures suggest.

An estimate by the Department of Enterprise Energy and Industrial Strategy (BEIS) found that around £ 19.8 million could be lost of the £ 66.5 billion that was loaned under three plans.

The data is only released until March this year, and more than £ 10bn more was loaned before they closed, so the final figure lost is likely to be a bit higher.

That’s a lot of money, but well below an earlier estimate that put losses between 35% and 60%, or around £ 23bn to £ 40bn on loans that had been made in March.

While it is too early to give a definitive view of the final level of defaults, this latest data suggests that current levels of defaults are lower than some illustrative worst-case scenarios presented before repayments begin.

READ MORE

Some of the losses are due to fraud and payments made in error. Concerns had been high over the Recovery Loan Program (BBLS), which funneled £ 46bn to small businesses in March.

To speed up payments on the scheme, lenders had to do nothing more than the most basic checks before handing over money to companies. In the end, more than a million companies applied for a recovery loan.

The loose controls left many concerned that scammers could be targeting the scheme in large numbers.

The Government estimates that between £ 3.6bn and £ 6.3bn of loans could be lost through fraud and error.

“Most of these expected losses arise from borrowers defaulting on loan payments for legitimate reasons, but the department has also taken into account anticipated losses due to BBLS fraud,” the department said.

“He believes that due to the design of the scheme and the speed with which the loans were issued through this scheme, the risk of fraud is considerably higher than in the other two loan schemes.”

He has worked with the Insolvency Service, the corporate house, other departments, banks, and local authorities to track down scammers.

This work is expected to continue for several years. Authorities have already made more than 65 arrests and have recovered £ 3.5 million as a result.

About 4% of the recovery loans have been fully repaid, while 2% have defaulted, according to the British Business Bank, which administered the scheme.

More than a fifth of companies have chosen an option that allows them to pay back their loans at a slower rate.

Only about half of the loans from two other schemes, called CBILS and CLBILS, have defaulted.

British Business Bank said: ‘While it is too early to give a definitive picture of the final level of defaults, this latest data suggests that current levels of defaults are lower than some illustrative worst-case scenarios presented before reimbursements begin. ‘ .

“These levels, however, are subject to any change in market conditions or individual circumstances and are therefore expected to fluctuate in the future.”