The government could be owed much less money than initially thought from one of its emergency loan programs launched during the pandemic, according to early data from banks.
Only about 5-10% of businesses that used the Bounce Back loan program last year failed to make repayments, which became due as of May of this year, the Financial Times reported on Wednesday, citing reports. sources.
Bank sources confirmed to the PA news agency that these numbers largely match what they have seen in recent months.
Last week NatWest, which loaned £ 9.1 billion under the scheme, said around 92% of customers who took out a bounce loan were paying on time or in advance.
About 5% have already paid off in full.
Earlier this year, the British Business Bank, which administered the £ 47 billion program, said about one in five businesses that took out a bounce loan had spent nothing.
However, 23% said they had already spent all the borrowed money.
The rebound loans were provided by normal banks, to the tune of £ 50,000 for each company.
To withdraw money quickly, banks did not have to check whether customers could repay. Instead, the government said it would cover loans if businesses were unable to repay.
Initially, the government estimated that between 35% and 60% of borrowers could default on loans. This would leave the taxpayer forced to pay up to £ 28bn.
Figures reported by the Financial Times suggest that number could be much lower, at just around £ 5 billion.
However, the data can be skewed by grace periods on loans. Businesses can request a payment break of up to six months, and can delay an additional 18 months by paying only the interest on their loans.
NatWest said about 5% of borrowers have requested another payment holiday.
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