Home / Money / Taxpayers set to be saddled with £10bn of bad emergency loans

Taxpayers set to be saddled with £10bn of bad emergency loans

Taxpayers could be saddled with bad loans worth almost £10billion after the coronavirus crisis because almost half of small businesses that have borrowed an emergency loan do not expect to be able to pay it back.

The Business Banking Resolution Service (BBRS), which was set up after a review into complaints against major lenders, has surveyed 500 small- and medium-sized enterprises since the pandemic began. 

Burden: The Treasury has agreed to bear 80% of any losses under the Coronavirus Business Interruption Loan Scheme and 100%  of losses under the Bounce Back Loan Scheme

Burden: The Treasury has agreed to bear 80% of any losses under the Coronavirus Business Interruption Loan Scheme and 100%  of losses under the Bounce Back Loan Scheme

Burden: The Treasury has agreed to bear 80% of any losses under the Coronavirus Business Interruption Loan Scheme and 100%  of losses under the Bounce Back Loan Scheme

Of those who had taken one of the Government’s taxpayer-backed loans, 43 per cent said they did not expect to repay it.

This could leave the Treasury with a headache, as it has agreed to bear 80 per cent of any losses under the Coronavirus Business Interruption Loan Scheme (CBILS) and 100 per cent of losses under the Bounce Back Loan Scheme for smaller businesses. 

As of Tuesday this week, the two schemes had lent out £21.4billion to 505,000 businesses.

The BBRS’ said customers must understand ‘they will be required to repay 100 per cent of the money they borrow’.

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