FRAUD FRIDAY — Britain Also Has COVID 19 Loan Fraud Problems

February 28, 2025

Bob Coleman
Founder & Publisher

FRAUD FRIDAY — Britain Also Has COVID 19 Loan Fraud Problems

COVID-19 PPP loan fraud is not a uniquely American problem. Our friends across the pond have a similar situation.

In response to the global pandemic, the UK created their version of PPP, called the Bounce Back Loan Scheme.

The £77 billion program (£1 equals US $1.25) offered 100% government-guaranteed loans up to £50,000.

Unlike PPP loans, these loans were required to be repaid, but carried a low 2.5% interest rate. Bounce Back loans could be used to purchase company assets such as vehicles, working capital, or any other economic benefit to the business.

Managed by “The Insolvency Service,” the loans could be amortized over 6 to 10 years, with payments starting 12 months after disbursement.

A recent Crown report estimates that 2.5%, just under £2 billion, has been flagged by lenders as suspected fraud. Unfortunately for those lenders, they lost the guarantees:

“Guarantee removals most frequently occur when lenders, either through their own processes or in discussion with British Business Bank, identify issues within their portfolio of scheme facilities. Issues can include matters such as data entry errors or where the lender wishes to voluntarily remove the facility from guarantee cover for other reasons.

“As at 30 September 2024, the government guarantee has been removed [denied] from 13,484 loans to a total value of £1.11 billion.”

As in the United States, the creation of COVID-19 lending programs for small businesses brought warnings about fraud.

A May 2020 letter from the British Business Bank, whose motto is “unlocking finance for smaller businesses,” stated:

“Over the last 10 days we have been working rapidly with your officials for the launch of the bounce back loans scheme. We are all doing the best we can in an unprecedented situation and we are acutely aware of the imperative for us to act at PACE to support the economy.”

“On propriety, our primary concerns relate to the extensive Reliance and customer self-certification and the corresponding fraud risk.”

“The scheme is vulnerable to abuse by individuals and by participants in organized crime. Alongside the fraud risk, there will be considerable credit risk in the current economic environment which will be exasperated by removing significant elements of the credit checks that would otherwise have been undertaken.”

As in the United States, the Prime Minister’s government clearly understood the importance of getting capital to Britain’s main streets as quickly as possible to avert a national economic meltdown. The scheme was designed by the British government to make payments quickly. Lenders were told to conduct “fraud” checks but were still expected to make payments within 24 hours, or 48 hours if further information was required.