Falkirk firms pocket £75m via coronavirus loan scheme

New figures from the British Business Bank, which is owned by the UK Government, have revealed take-up of the scheme, which enabled SMEs to borrow between £2,000 and up to 25 per cent of their turnover, up to £50,000.

But it comes amid an official report warning that suspected fraud and inability to repay the borrowed cash could cost taxpayers across the UK tens of billions of pounds.

Companies in Falkirk’s two parliamentary constituencies had received 2,738 loans worth £74.5m through the scheme by October 4, the latest British Business Bank figures show.

That compares with a UK-wide total of 1.3 million payments worth £38 billion, while companies in Edinburgh’s five parliamentary constituencies, for example, had received 7,175 loans worth £216.2m.

The Treasury backs the loans, which are handed out by commercial lenders such as Lloyds Bank and Royal Bank of Scotland, and borrowers don’t need to pay fees or interest for the first year.

A report by the National Audit Office (NAO), the UK’s public spending watchdog, warned the UK Government could face huge losses due to fraudulent claims and firms being unable to repay.

The British Business Bank – which delivers the scheme – and the Department for Business, Energy and Industrial Strategy estimate that up to 60 per cent of borrowers could fail to repay.

The NAO said this could lead to a maximum of £26bn in losses if lenders pay out £43bn by November 4, although it warned the estimates are “highly uncertain”. The deadline for applications has been extended to the end of November.

The House of Commons Public Accounts Committee, which oversees government spending, will hear evidence about the scheme at a hearing on November 5.

A UK Government spokesman said the NAO report showed that its loan schemes “have provided a lifeline to thousands of businesses across the UK”. He said: “We’ve looked to minimise fraud ... any fraudulent applications can be criminally prosecuted for which penalties include imprisonment or a fine – or both.”

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