With coronavirus ripping through the United Kingdom, the government had decided to push through the UK Covid Loans to small businesses. But, it backfired spectacularly when one of the richest financiers of the country, John Beckwith, received a relief loan- backed by the taxpayers, for about 3.7 million points- even though the firm hadn’t been active for quite a few years.
A review from Bloomberg News highlighted the same- almost 50% of the loans which were sanctioned under the Coronavirus Business Interruption Loan Scheme showed that the lenders had handed out almost 130 million pounds to companies that had similarly questionable claims at receiving the money- even though the requirement stated that borrowers had to be negatively affected by the pandemic.
The UK Covid Loan Might Not Be The Solution
One UK Covid Loan, for around 4.7 million pounds- was delivered to a firm that had been established just a couple of days ago before it received the payment. And a million-pound loan went to a company that had been pretty dormant before the onset of the pandemic- after which it went into voluntary liquidation just a year later.
Although such cases are far and few in between, it does point fingers at the government’s ability to keep the loan details a secret- along with the extent to which the lenders went to carry out their due diligence.
The British Business Bank, or the BBB- which was the principal institution behind administrating the UK Covid Loan program, went on to decline a request for freedom of information by Bloomberg News, as they cited the need to protect the commercial interests of the companies- but, before leaving the EU, the country had to share the identities of the borrowers under the rules upheld by the EU.
Bloomberg News then obtained the records of 49,000 companies that comprised almost 45% of the total borrowers of the UK Covid Loan.
