The banking industry is overseeing plans for an agency to collect overdue government-backed Covid-19 loans.
UK Finance, the banking trade body, is conducting a feasibility study on the creation of a vehicle that would oversee debt collection on behalf of lenders who took part in the state’s emergency bounceback loan scheme.
Bounceback loans provide private sector lenders with a 100% state guarantee on loans to qualifying small companies of up to £50,000, or 25% of annual turnover, at 2.5% interest. It has underwritten more than £38bn of credit to almost 1.3m companies.
Official estimates of the default rate are extremely broad, from as little as 15% to as high as 80%.