Just 0.3 per cent of bounce back loans are believed to have been fraudulently acquired, new research has found.
According to the latest Equifax Market Pulse series, as few as 0.3 per cent of companies which received a bounce back loan were found to have taken out loans in excess of the scheme’s £50,000 cap.
Meanwhile, just 0.4 per cent of loan recipients secured bounce back loans with multiple providers.
Equifax also found that “a relatively low 12 per cent of businesses with a bounce back loan are consistently spending more money than they are generating each month.”
Last month, Equifax estimated that the levels of application fraud are likely to be as low as 0.5 per cent for bounce back loans.
“Despite some speculation over the misuse of the UK government’s bounce back loan scheme, a look under the lid shows levels of fraud are likely to be significantly lower than feared,” said Andrew Fielder, commercial lending expert at Equifax UK.
“Clearly any amount of fraud is too much and the full extent of losses won’t be known until borrowers begin repayments in early May, but data suggests that lender checks have stopped the most egregious cases at the door.
“It’s extremely encouraging to see the scheme is working as intended, helping otherwise viable companies hit hard by Covid-19 restrictions to stay afloat.”
Equifax research also found that the majority of bounce back loan recipients have continued to dip in and out of the red month to month. Across a six-month period, just two per cent of businesses were consistently in positive financial territory, while just 24 per cent reported positive net cash flows in four or more months.
“The outlook for many companies still remains deeply uncertain,” added Fielder.
“There are choppy waters to navigate ahead as the economy emerges from lockdown restrictions, and big data insights will continue to prove vital in shedding light on the health of the evolving business credit market.”
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