London Daily

Focus on the big picture.
Tuesday, Oct 06, 2026

Thousands of small firms go bust owing millions in bounce back Covid loans

Thousands of small firms go bust owing millions in bounce back Covid loans

More than 16,000 businesses which took out a type of government-backed Covid loan have gone bust without paying the money back, the BBC has found.

Hundreds of directors, who got loans they were not entitled to, have also been disqualified.

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

Questions are now being asked about what is being done to recoup the money.

The figures, obtained by the BBC under a Freedom of Information request, have been described as "shocking" by a former head of the Serious Fraud Office.

Sir David Green QC describes checks the government required banks to do on bounce back loan applicants as "hopelessly inadequate".

Sir David Green QC says checks carried out on bounce back loan applicants were "hopelessly inadequate"


A total of 1.5 million loans worth £47bn were handed out. One of several measures designed to help businesses survive the pandemic, the loans were supposed to be paid back within 10 years. But in the rush to save the economy, checks on borrowers were limited.

Under the scheme any small company could apply for a loan of up to £50,000 depending on its turnover. Applicants were allowed to "self-certify" the figures.

"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," said Sir David, who is now chairman of the Fraud Advisory Panel.

He believes bounce back loan money must be recovered wherever possible.

The government has said it will "not tolerate" people defrauding taxpayers.

The BBC has been investigating what will happen to the hundreds of millions of pounds of taxpayer money given to companies which have since become insolvent.

The majority of those businesses went bust for legitimate reasons, however there is increasing evidence that a proportion of bounce back loans were misused. The BBC has discovered 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. Previous research shows that 45% of successful applicants to two banks showed no evidence of trading at the relevant period.


Festival organiser


With festivals cancelled, Peter Ferguson's events companies struggled during the pandemic. And so he turned to the government's bounce back loan scheme.

Mr Ferguson took out a £50,000 loan through a dormant company called Beautiful Digital Events Ltd. He gave a turnover figure which overstated the true amount and used the money to buy himself two cars.

Peter Ferguson took out a £50,000 bounce back loan through a dormant company


Mr Ferguson has since been censured by the Insolvency Service and banned from being a company director for six years.

But another of his companies is putting on one of Scotland's biggest festivals, Party at the Palace, on 13 and 14 August.

Mr Ferguson is no longer allowed to be a director, but is listed as a "person with significant control" and promotes the festival line-up on his Facebook page.

And, earlier this year, on holiday in Las Vegas, Mr Ferguson won more than £200,000 playing poker.

The terms of the bounce back loan state that the dormant company is liable to pay it back, not him personally - and that company has now been dissolved.

Mr Ferguson responded in a statement: "With the in-person events industry in Scotland wiped out overnight, I sought a loan to move into the digital events space.

"Despite our best efforts and much to my deep sorrow, this service failed. I was advised to liquidate the company, having been willing to repay the loan up to that point."

He has confirmed that he took out a total of five bounce back loans, including the one for Beautiful Digital Events. As for the four others, he said "one has already been paid back in full and a payment has not been missed on the others".

Scrolling through the website of the Insolvency Service, we found scores of company directors who took out loans with, it seems, little or no prospect of being able to repay them.

In fact, a request under the Freedom of Information Act reveals that so far 260 directors have been disqualified with their companies still owing a bounce back loan.

The loans were spent on everything from gambling debts and cryptocurrency schemes - to cars, house renovations, even flying lessons.

The rules state that if there's no money left in the business the loan can't be paid back.

So it's not clear how much the government will eventually be able to recover.


Chasing the money


Several agencies have been tasked by the government with investigating Covid loans and getting back the money.

The Insolvency Service has brought only one prosecution to date but claims it has another 30 cases pending.

Its website is updated almost daily with new examples of directors being banned from running a business after obtaining bounce back loans they weren't entitled to. The maximum ban lasts 15 years.

But the service has no record of how much money has been recovered because each case is handled separately by a private insolvency practitioner.

The government has also asked the National Investigation Service (Natis) - a law enforcement organisation which usually investigates local authority corruption - to look into the scheme.

The latest figures show Natis, which has a £6m budget, made 49 arrests and recovered just £4.1m. It has identified 673 suspects of whom 559 used the bounce back loan scheme.

It's now thought £17bn could be lost to fraud, mistakes and companies going under.

Sir David Green QC from the Fraud Advisory Panel believes organised criminal groups have had a field day.

"Fraud is opportunistic and organised crime groups are experts at that opportunism."

But he thinks with limited resources, police should target the worst offenders, while company directors who did not play by the rules should be pursued through the civil courts.

"It's important to concentrate on those areas where you get most bang for your buck, and that, I would suggest, is in relation to the most egregious organised frauds rather than individuals," he said.


Ten-year ban
Raitis Dzerkalis claimed a £40,000 bounce back loan he wasn't entitled to


Raitis Dzerkalis had a car repair company in the West Midlands. He claimed a £40,000 bounce back loan - he wasn't entitled to it.

The Insolvency Service said he exaggerated turnover and didn't spend the money on the business.

The company became insolvent and, like Peter Ferguson, he was banned from being a director - in this case for 10 years.

But Mr Dzerkalis has another company, which he transferred into the name of a housemate.

Now Mr Dzerkalis seems to work as a part-time DJ.

We caught up with him at home in Coventry but he didn't want to talk. So we have no idea if he has attempted to pay any of the loan back.

Business Minister Lord Callanan said in a statement that "tough new powers" had been introduced allowing the Insolvency Service to disqualify directors for dissolving companies to avoid repaying bounce back loans.

Newsletter

Related Articles

0:00
0:00
Close
Green Party Faces Backlash Over Resolution Equating Zionism With Racism
Conservatives Debate Scrapping Environmental Rules for New Homes
Cornwall Insight Warns UK Energy Bills Could Approach £2,000 This Winter
UK Coach Operators Warn of Service Cuts as Diesel Prices Exceed £2
Scottish Parliament Approves £68 Billion Budget With New Tax and Property Measures
FCA Opens Independent Review Into Handling of Epstein Whistleblower
UK Government Drops Plan to Suspend Jury Trials in England and Wales
Bank of England Holds Interest Rate at 3.75% as Markets Watch November
Two Iranian Nationals Charged Over Alleged Plot Targeting Manchester Jewish Community
UK Fiscal Headroom Halves to £11 Billion Ahead of Budget, EY Warns
US Bomber Withdrawal From RAF Fairford Prompts UK Security Review
Sarah Wakfer Appointed Chair of Northern Ireland’s Health and Care Regulator
Scotland Housing Completions Fall to 11-Year Low Amid National Shortage
UK Water Companies Face Tougher Oversight and Unannounced Regulatory Inspections
Middle East Conflict Pushes UK Fuel and Wholesale Energy Prices Higher
Andy Burnham Raises Prospect of Second Brexit Referendum in Review of UK-EU Relations
EY Warns UK Fiscal Headroom Has Halved to £11 Billion Ahead of Autumn Budget
BT Accused of Pressuring Vulnerable Customers During Digital Landline Shift
British Carmakers Warn of Growing Pressure From EU-China Tariff Dispute
Green Party of England and Wales Adopts Motion Defining Zionism as Racism
Medical Charity Threatens NHS Legal Action Over Two-Year Autism and ADHD Assessment Waits
British Transport Police Report Record Rise in Violence on Railways
Glasgow Council Workers Face Pay Cuts Under Fire-and-Rehire Plan
British Medical Groups Press Prime Minister Andy Burnham to Cancel £330 Million Palantir NHS Contract
UK Faces Record Bluetongue Outbreak Across Livestock Farms
UK Schools Report Thousands of Child-on-Child Sexual Offences
High Court Overturns Ban Blocking Gaza Families From Reuniting With Relatives in UK
G7 Authorizes Emergency Fuel Release as UK Diesel Prices Hit £2 a Litre
France and Italy Draw 1-1 in Nations League Match
Pope Leo XIV and Prince Albert II of Monaco Meet in Metz
SNCF Expands Low-Cost Ouigo High-Speed Service Between Lyon and Bordeaux
Paris Expands Dedicated Cargo Bike Routes for Urban Deliveries
French Film Industry Pushes for Tighter Streaming Investment Rules
Marseille Court Hands Down Prison Terms in Public Procurement Corruption Case
LVMH and Kering Rely on US Demand as Chinese Luxury Spending Slows
Toulouse Aerospace Sector Launches €80 Million Modernization Fund
Javier Milei Courts French Investment in LNG and Lithium
Mistral AI Launches Sovereign Model for European Public Services
French Competition Authority Fines Retailers €40 Million Over Misleading Promotions
France Records Exceptional Electricity Exports as Nuclear Output Recovers
Dassault Aviation Expands Rafale Assembly Capacity at Mérignac
Sanofi Invests €1 Billion in New Biologics Production Hub Near Lyon
France Protests Germany’s Extension of Border Controls Into 2027
French Public-Sector and Transport Unions Threaten National Strike
France Deploys Riot Police After Violence in Lyon Suburbs
French Anti-Terrorism Prosecutors Investigate Radicalized Flydubai Co-Pilot
France’s Defense Budget Surpasses NATO’s 2% of GDP Target
French Government Faces No-Confidence Threat Over Budget
France and G7 Release 100 Million Barrels From Strategic Oil Reserves
France Convenes Emergency Defense Council Over Threats to Commercial Shipping
×