Thousands of small firms go bust owing millions in bounce back Covid loans

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Thousands of small firms go bust owing millions in bounce back Covid loans




More than 16,000 businesses which took out a type of government-backed Covid loan have gone bust without paying the money back, the BBC has found.


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Hundreds of directors, who got loans they were not entitled to, have also been disqualified.


The cost to the taxpayer of these insolvencies could be as much as £500m, and is likely to grow as more companies go under.


Questions are now being asked about what is being done to recoup the money.


The figures, obtained by the BBC under a Freedom of Information request, have been described as "shocking" by a former head of the Serious Fraud Office.


Sir David Green QC describes checks the government required banks to do on bounce back loan applicants as "hopelessly inadequate".


A total of 1.5 million loans worth £47bn were handed out. One of several measures designed to help businesses survive the pandemic, the loans were supposed to be paid back within 10 years. But in the rush to save the economy, checks on borrowers were limited.


Under the scheme any small company could apply for a loan of up to £50,000 depending on its turnover. Applicants were allowed to "self-certify" the figures.


"You wouldn't send an army into battle without assessing the risks. And just the same in this situation, the risks, which were obvious, should have been assessed and addressed," said Sir David, who is now chairman of the Fraud Advisory Panel.


He believes bounce back loan money must be recovered wherever possible.


The government has said it will "not tolerate" people defrauding taxpayers.