Thousands of businesses go bust without paying back Covid loans

The figures, obtained by the BBC under a Freedom of Information request, also found hundreds of directors - who got loans they were not entitled to - have been disqualified. 

The cost to the taxpayer of these insolvencies could be as much as £500m - and this is likely to grow as more companies go under.

Sir David Green QC - who is chairman of the Fraud Advisory Panel - told the outlet the checks required banks to do on bounce back loan applicants were “hopelessly inadequate”. 

He explained: "You wouldn’t send an army into battle without assessing the risks. And just the same in this situation, the risks, which were obvious, should have been assessed and addressed.” 

The BBC also found that, while the majority of the businesses went bust for legitimate reasons, there is increasing evidence that a proportion of bounce back loans were misused - discovering that hundreds of company directors have so far been disqualified from running businesses. 

And many of those companies were not eligible to receive the loans in the first place, with research published by Synectics Solutions in December showing that 45% of successful applicants to two banks showed no evidence of trading during the relevant period. 

In addition to this, it found that - of the £47bn worth of loans issued - £4.9bn were estimated to be fraudulent loans, while the estimated value of credit defaults was worth £12.1bn.