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Chancellor Rishi Sunak announced the Bounce Back Loan scheme on April 27, with registrations rising to a record 21,616 by the end of June. However, the scheme has become embroiled in scandal over recent weeks after the National Audit Office (NAO) said taxpayers could lose as much as £26 billion from fraud, organised crime or default. Speaking to Express.co.uk, a spokesman for the Treasury did not say how the stolen money would be restored.
But they did add the Government will continue to work with the banks to ensure that those businesses they supported get the necessary time to get back on their feet and recover from the crisis.
The Government spokesman told Express.co.uk: “As the NAO rightly sets out in this report, our loan schemes have provided a lifeline to thousands of businesses across the UK – helping them survive the outbreak and protecting millions of jobs.
“We targeted this support to help those who need it most as quickly as possible and we won’t apologise for this.
“We’ve looked to minimise fraud – with lenders implementing a range of protections including anti-money laundering and customer checks, as well as transaction monitoring controls.
“Any fraudulent applications can be criminally prosecuted for which penalties include imprisonment or a fine or both.”
Fraudsters have been able to steal victims’ personal details by using phishing emails or buying them on criminal forums.
The scammers are then able to set up a bogus business in their name.
After opening a business bank account, they then apply for a Bounce Back Loan through the same bank.
Since the scheme started, banks have lent an estimated £40 billion through the scheme and provided loans of up to £50,000 to more than 1.3 million companies, according to the latest Treasury figures in October.
The loans are backed by a 100 percent government guarantee to help businesses get back on their feet following the unprecedented crisis this year.
However, banks need to prove they have made a thorough effort to recover the cash before claiming the money from the Government.
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The rules originally stated the scheme should only apply to firms set up before March 1, 2020.
But there have been applications granted for companies that were created as late as June.
Following the huge demand, Mr Sunak has now extended the deadline for BBL applications from November 4 to November 30.
While launching his Winter Emergency Plan last month, Mr Sunak said the Treasury is also starting work on a new loan programme.
This will succeed the current support schemes and is set to begin in January 2021.
The NAO’s investigation into the scheme claimed “payment speed” may have been a factor for fraud to take place.
The report said: “Once Government decided to support small businesses facing cash flow problems owing to the pandemic, it moved very quickly to set up a scheme.
“It prioritised one aspect of value for money – payment speed – over almost all others and has been prepared to tolerate a potentially very high level of losses as a result.
“These losses can stem from businesses wanting to pay back loans but finding themselves unable to, through to organised criminals taking out loans with no intention of ever paying them back.
“The Scheme achieved its initial objective of quickly supporting small businesses, but a lack of more detailed Scheme-specific objectives will make it difficult to measure its ultimate success.”
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