Uncertainty around the destiny of over a million lending that still need to be returned by borrowers or handled by the government has been exacerbated by Britain’s choice to remove warranties on a portion of emergency loans given to small businesses during the pandemic.
According to a Reuters story published on Wednesday, the UK government had removed guarantees on emergency pandemic loans of approximately one billion pounds ($1.2 billion), which, according on the lending arrangement, had covered 80%–100% of the loan’s risk of default.
According to Reuters’ analysis of publicly available government data, 1.1 million loans—or nearly half of the forty-seven billion pounds in total monies awarded under the nation’s biggest “Bounce Back Loans” (BBL) scheme—remain unpaid.
According to the most recent government data on BBLs, as of June 30, two billion pounds were overdue, and 532 million pound had fallen behind and were not yet under the purview of claims. Lenders were waiting on a government judgment regarding the guarantee after submitting claims for loans totaling one billion pounds.
On that day, the majority of the loan’s outstanding balances, totaling over 20 billion pounds, were being repaid on time.
According to a representative for the British business department, “the overwhelming majority of bounce back lending scheme amenities, over three quarters, were or are currently on schedule for being fully repaid.”
“Loans are entirely backed by government, and borrowers would only be accountable if they failed to comply to any conditions of the assurance agreement.”
This implies that billions of pounds’ worth of loans are still unaccounted for, which could result in increasing expenses for government agencies or the banks who made the loans.
According to bank advocacy group UK Finance, banks and the British Business Bank (BBB), which oversees the loan programs, have regular talks. Some banks have the authority to remove loans from the guarantee program at their own discretion.
In reply to a Reuters FOIA request, the BBB had stated that violations of scheme regulations, data adjustments, and application problems that led to the sending of duplicate payments to enterprises were the reasons behind the revocation of guarantees on certain loans.