The British government reportedly expects that 3.3 billion pounds (about $3.8 billion) of the “bounce-back” loans it made to small- to medium-sized businesses (SMBs) in response to the pandemic will be ultimately found to have been fraudulent.
According to a Friday (Sept. 2) report by Reuters, another source said 1.1 billion pounds (about $1.3 billion) of these loans have already been classified as suspected fraud, this amount could grow as more fraud is uncovered, and this will be announced in upcoming government data.
Forty-seven billion pounds (about $54.1 billion) in “bounce-back” loans have been distributed by British banks under the plan since May 2020, according to the report.
“We’re continuing to crack down on COVID support scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers,” a government spokesperson said, per the report.
As early as November 2020, the Financial Times reported that United Kingdom banks had rejected 27,000 “bounce-back” loans that would have totaled $1.3 billion.
Read more: UK Banks Nix $1.3B in Fraudulent ‘Bounce-Back’ Loans
As PYMNTS reported, the “bounce-back” loans were designed to help U.K. businesses get back on their feet in the wake of the pandemic and the ensuing economic downturn.
The program allowed SMBs to borrow just under $65,000 interest-free for a year, with the loans guaranteed by the government.
Fraud has been an issue 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 made off with roughly $100 billion in pandemic relief monies.
See more: PPP Loan Fraud Shows the Lures and Risks of Quick Onboarding
CNBC reported that the funds were siphoned away from the PPP program and the Economic Injury Disaster Loan program, among others.
Assistant Special Agent in Charge Roy Dotson told CNBC “there’s no doubt that the programs were easily accessible online. And so, with that, comes the opportunity for bad actors to get into that mix.”
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