British Business Bank Blasts Bounce-Back Loan Abuse

There’s an old political adage about never wasting a good crisis. The UK government’s prompt, if unfocused, action to shore up SMEs with Bounce-Back Loans has proved to be an opportunity for the unscrupulous (who’ve been making the most of the Covid-19 crisis in a nasty way).

The state-owned British Business Bank issued formal objections to the government’s coronavirus Bounce Back Loan and Future Fund schemes ahead of their launch, newly-released documents show. 

In letters sent to business secretary Alok Sharma in May, BBB chief executive Keith Morgan raised concerns including the BBL scheme’s “very significant fraud and credit risks” and whether the Future Fund would offer “value for money”.

Launched in May, BBLs are 100 per cent government-backed loans of up to £50,000 introduced to help keep small businesses mitigate the disruption caused by Covid-19. As of 20 September, bounce back loans totalling just over £38bn had been approved for 1.3m small businesses, according to the latest figures from the Treasury.

The Future Fund was introduced to provide loans for startups ineligible for other government support, providing them with loans subjected to matched funding by private investors. 

In a letter sent two days before the launch of the BBLs, Morgan raised three formal objections to the scheme. 

These included concerns over its “extensive reliance on customer self-certification and the corresponding fraud risk” and “potential for market distortion”. He said that the Bank had commissioned a review of the scheme by accountant PwC, which had classified its fraud risk as “very high”. 

Morgan highlighted concerns over bounce back loans’ value for money, writing: “the scheme is vulnerable to abuse by individuals and by participants”. 

Loan Latest

  • Our latest loan offering, the property-backed offering from, has attracted 32 per cent of the £150,000 it is seeking. The loan is rated A+ by our credit committee, and yields 8 per cent over a three-year term. For more detail, login.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.

  • Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.

So here’s our guide to the process:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.

Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.