Defaults on bounce back loans may reach £26bn

Industry News | 09/10/20

British taxpayers may lose up to £26bn on unpaid bounce back loans, with arrears rates potentially reaching 60% across these loans, according to the National Audit Office.

Overall it is estimated that up to £48bn could end up being lent under the scheme by 4 November 2020, substantially more than was expected.

The scheme provides businesses with 100% government-backed finance worth up to £50,000. These loans do not have to be paid off for 10 years and offer a range of flexible payment options.

The £26bn default figure is based on the scheme having lent £43bn and analysis of credit and fraud risks across bounce back loans, however the government spending watchdog stresses the estimate of 35% to 60% defaults is “highly uncertain”.

Source: Credit Strategy