Originally written by Timothy Adler on Small Business
Nearly two thirds of Bounce Back Loans, designed to help small businesses survive Covid-19, may never be repaid, says the government.
The business department in its latest set of accounts says that up to 60 per cent of Bounce Back Loans, hurriedly introduced in July, could go bad.
If so, that could mean the taxpayer having to find over £20bn to cover small business loans which have defaulted.
>See also: Small businesses have average of just £9,000 left from Bounce Back Loan
The Bounce Back Loan Scheme (BBLS) provides private sector lenders with a 100-per-cent state guarantee on low-interest loans to small companies. It has underwritten £38bn of credit to 1.3 million companies to date.
Overall, the taxpayer faces losses of as much as £23bn so far in bad loans across all the state coronavirus emergency bailout schemes.
Vulnerable to abuse
Yesterday, it emerged that ex-British Business Bank (BBB) CEO Keith Morgan wrote to business secretary Alok Sharma in May, warning that the schemes risked wasting taxpayers money.
Mr Morgan said: “The scheme is vulnerable to abuse by individuals and by participants in organised crime.”
A draft review by PwC had classified the risk of fraud as “very high”, he added.
The BBB, which