Bounce Loan Fraud


The Bounce Back Loan Scheme (BBLS) fraud, where companies apply for multiple government-guaranteed loans to exceed loan limits, could be much lower than expected, according to a credit checking agency.

Previous estimates of what the BBLS could lose due to fraud and credit risk ranged from 15% upwards, but just 0.3% of companies using the program took out a total of loans exceeding the limit of. £ 50,000, with only 0.4 pc in total securing facilities with multiple vendors.

Meanwhile, 12% of relatively weak businesses4 with a bounce-back loan consistently spend more money than they generate each month. The majority continue to dive in and out of the red month-to-month, suggesting the program is keeping viable businesses locked out, says Equifax.

Only 2% of companies were consistently in positive financial territory over an entire six-month period, the agency said. Highlighting the volatile and precarious financial situation large sections of the market continue to face, barely one in four, 24% have achieved positive free cash flow in four months or more, leaving three-quarters of companies unable to maintain this level for most of the period.

Andrew Fielder, commercial lending expert at Equifax UK, said: “Despite some speculation about the UK government’s misuse of BBLS, a peek under the cover shows that fraud levels are likely to be significantly lower. to what we feared. Clearly the amount of fraud is too high and the extent of the losses will not be known until borrowers start repaying in early May, but data suggests lenders’ checks have halted cases. the most serious at the door. It is extremely encouraging to see that the program is working as intended, helping otherwise viable businesses hit hard by COVID-19 restrictions to stay afloat.

“The outlook for many companies is still deeply uncertain. There are rough waters to move forward as the economy emerges from foreclosure restrictions, and big data insights will continue to prove vital in shedding light on the health of the evolving corporate credit market. . “


To combat fraud in HM Treasury’s covid schemes, in its 2021 Budget Speech On March 3, Chancellor Rishi Sunak announced the creation of an HM Revenue and Customs task force of around 1,000 investigators, along with new measures and investments in HMRC, to combat tax evasion and fraud .

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