Taxpayers have been left to foot a £421 million bill to cover Covid debts, after one in 12 businesses defaulted on state-backed emergency loans according to latest data from the Department for Business, Energy and Industrial Strategy.
The data show that around 8% of 1.6m borrowers – roughly 130,000 – failed to repay their debts as of March this year. Around £352m were made for bounce-back loans, the scheme which accounted for £47 billon of the £77 billion total lent to businesses through the programme.
High street banks and online lenders, which distributed the loans on behalf of the government, have claimed a combined £421 million of taxpayer cash to cover the defaults. Metro Bank, Barclays and Starling Bank have claimed the most money to date on bounce-back loans, with the government paying out £122m, £88m and £61m respectively.
The proportion of claims relative to their total loans varied, with Metro having claimed an estimated 8.5% of the total, while the amount claimed by Barclays and Starling totalled an estimated 0.8% and 3.8%, respectively. Tide and Capital on Tap claimed back about a quarter of the total money they each lent to businesses through the bounce-back scheme.
About 18,000 of the 1.5 million bounce-back loans claimed were flagged for suspected fraud by lenders, according to the British Business Bank. While it was previously estimated that fraud losses could exceed £4.9bn, more recent estimates place the total at about £3.5 billion.