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UK-based taxpayers face GBP 26 bln loss due to BBLS fraud and defaults

Thursday 8 October 2020 13:41 CET | News

The National Audit Office (NAO) has raised concerns that taxpayers might lose up to GBP 26 billion due to fraud and defaults on the Bounce Back Loan Scheme (BBLS).

The BBLS is a government-backed emergency loans scheme designed to aid struggling small businesses hurt by Covid-19 with loans of up to GBP 50,000. Starling Bank and Tide are two fintechs which offered loans under the scheme, though both encountered problems with the scheme. In July 2020, after hitting its GBP 50 million lending cap, Tide was unable to raise additional capital to keep lending and shut its scheme. Starling, meanwhile, faced a backlash after it stopped accepting new sole trader business accounts.

Treasury figures show that over GBP 38 billion has been approved for 1.3 million small businesses under the BBLS, as of 20 September 2020. The NAO says that assuming the BBLS ends in November 2020 with GBP 43 billion of loans would imply a potential cost to government of GBP 15 billion to GBP 26 billion. The NAO said the government’s preliminary estimate that up to 60% of borrowers may default on the loans was uncertain, according to AltFi.

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Keywords: UK, taxpayers, BBLS, fraud, defaults, National Audit Office, NAO, Bounce Back, Loan Scheme, Starling Bank, Tide, covid-19, small businesses, fintechs, sole trader business accounts
Categories: Banking & Fintech | Digital Identity, Security & Online Fraud
Countries: United Kingdom
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Banking & Fintech