Banks have prevented greater than £1bn price of fraudulent enterprise loans being paid out from one of many authorities’s emergency Covid schemes.

In a letter to the general public accounts committee, the British Enterprise Financial institution, which administers the government-backed mortgage programme, mentioned 20 lenders had blocked a complete 26,933 fraudulent purposes to the bounce-back mortgage scheme (BBLS) between Might and October.

These fraudulent purposes might have value the taxpayer £1.1bn, because the scheme makes use of public funds to repay any losses that lenders can’t get well.

The programme has distributed 1.3m loans price £40.2bn to date, however the Nationwide Audit Workplace (NAO) mentioned final month that taxpayers stood to lose billions of pounds from BBLS fraud. The Nationwide Crime Company (NCA) and the British Enterprise Financial institution have additionally warned about fraud linked to the scheme, which was designed to distribute low cost loans price as much as £50,000 to small companies.

The federal government has been criticised for failing to behave on these warnings, and has since launched a £100,000 Covid fraud hotline to attempt to catch scammers. The hotline, run by Crimestoppers, permits folks to depart nameless tips on suspected fraud, together with any uncommon purchases by firms or people, or about chilly callers asking for financial institution particulars that would result in identification theft.

A NAO report launched in October mentioned the size of BBLS fraud wouldn’t be clear for months. Nevertheless, the Cupboard Workplace’s authorities fraud operate estimates that losses will likely be considerably above the same old stage of fraud linked to public sector schemes, which is often between 0.5% and 5%.

Three folks were arrested over alleged BBLS fraud in Birmingham final week after acquiring £145,000 in government-backed loans. All three suspects have been questioned and have since been launched beneath investigation, in accordance with the NCA. It marked the primary arrests linked to the scheme.

Most accredited lenders have confined purposes to their clients, partly to forestall towards fraud. Nevertheless, the transfer has additionally blocked as much as 250,000 small companies from accessing emergency funding, as they don’t financial institution with any of the accredited lenders, in accordance with the all-party parliamentary group on honest enterprise banking.

BBLS is scheduled to run till 31 January, after an extension was announced this week. Companies may even be capable of apply for top-ups in the event that they didn’t request the utmost quantity obtainable of their preliminary software.

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