The UK government is reportedly expecting £3.3bn (around $3.8bn) of the ‘rebound’ loans it has provided to small and medium-sized enterprises (SMEs) in response to the pandemic will turn out ultimately fraudulent.
According to a Friday (September 2) Reuters report, another source said that 1.1 billion pounds (about $1.3 billion) of these loans have already been classified as suspected fraud, this amount could increase as more fraud is discovered, and this will be announced in the next government data.
Forty-seven billion pounds (around $54.1 billion) of “bouncing” loans have been dispensed by UK banks under the plan since May 2020, according to the report.
“We continue to crack down on COVID support program fraud and will not tolerate those who seek to defraud consumers and taxpayers,” a government spokesperson said, according to the report.
As early as November 2020, the Financial Times reported that UK banks had rejected 27,000 “bounce back” loans that would have totaled $1.3 billion.
Read more: UK banks nix $1.3bn in fraudulent ‘rebound’ loans
As PYMNTS reported, the ‘rebound’ loans were designed to help UK businesses get back on their feet following the pandemic and subsequent economic downturn.
The program allowed SMEs to borrow just under $65,000 interest-free for one year, with the loans guaranteed by the government.
Fraud has been a problem with a similar program in the United States, the Paycheck Protection Program (PPP).
As PYMNTS reported in December, the U.S. Secret Service Department said criminals seized about $100 billion in pandemic relief funds.
See more : PPP Loan Fraud Shows the Lures and Risks of Rapid Onboarding
CNBC reported that the funds had been diverted from the PPP program and the economic disaster loan program, among others.
Assistant Special Agent in Charge Roy Dotson told CNBC “there’s no doubt that the programs were readily available online. And so with that comes the opportunity for bad actors to get into that mix.” .
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