The Bounce Back loan program launched by the British government in May to spur England’s economic recovery from COVID-19 has been stifled by fraud and poor quality loans that could cost taxpayers as much as $ 35 billion, the Financial Times reported.
More than a dozen people were familiar with the details of the $ 58 billion program and the assessments were in many cases dark or worse.
Comments from the banking experts and interiors – some appropriated, some not – included: “The scheme was being abused and cheated on an industrial scale;” “In 10 years time, people will still be looking for the money;” “The April to June period was essentially a huge bonfire of taxpayers’ money, with banks only distributing games;” and “People saw it and thought, ‘wow’! Why on earth wouldn’t they take it? Free money basically. ”
The program virtually invited fraud by setting minimum standards for receiving loans, the paper reported. Lenders were required to do little to show that they were likely to be able to repay them.
Experts warned that underwriting is weak not only for individuals, but also for corporate lenders. In the case of corporate lending, the criticism began shortly after the launch of business relief programs in late winter.
The risk of loss experts discussed with the Financial Times was more serious than the figures presented by the British government in late September. In a report to the public at the time, the government estimated that losses from COVID-19 relief programs could be as low as $ 30 billion.
The Bounce Back program was designed to provide loans of up to $ 65,000 to small business lenders with a repayment period of about nine years. By October, some business owners were complaining that large banks were no longer arranging the loans, although the British government had the risk.