More than 8,300 bounce back loans issued to the construction sector during the pandemic are suspected to have been fraudulent, Construction News can reveal.
The loans, issued from May 2020 as emergency relief of up to £50,000 for small companies, were backed by 100 per cent government guarantees.
Data obtained by Construction News under the Freedom of Information Act from the British Business Bank, which facilitated the scheme, showed that 8,356 bounce back loans to the industry were flagged as suspected frauds by lenders at the end of January.
The figure has increased by 3,564 in the past two years as more potential cases have been identified, and now amounts to just over 3 per cent of all bounce back loans issued to the sector.
Anil Iyer, a civil engineer and director of B4 Investigate, which develops fraud-fighting software, questioned whether the latest figure could have been made available previously.
“It’s a sad reflection of an industry which, while leading on sustainability, health and safety and digital transformation, is still not doing enough to combat fraud and corruption,” he said.
A 2022 Public Accounts Committee report said the scheme’s focus on delivery of the loans “at breakneck speed” meant lenders were not required to do credit or affordability checks or even verify application information.
Not all of the companies self-declaring as a construction business under the scheme were genuinely involved in the sector.
Last month Arti Deda, 31, of Slough, Berkshire, was jailed for two-and-a-half years after fraudulently obtaining two bounce back loans for his construction firm Knight Workers.
According to an Insolvency Service statement, he falsely inflated the company’s turnover to obtain two maximum-value loans, worth £50,000 each in 2020, when companies were only entitled to one each.
Insolvency Service investigators found minimal evidence of any trading in the construction industry by Knight Workers, they added.
None of the £100,000 was used for the economic benefit of the business as was required under the terms of the scheme.
He also claimed in securing the second loan that it was his only application.
At the time, the agency’s chief investigator David Snasdell said: “Bounce back loans were designed to support small and medium-sized businesses through the pandemic. Taxpayers’ money should not have been used for personal purposes by company directors.
“The Insolvency Service is committed to investigating these crimes, which have a substantial impact on the public purse, and prosecuting those responsible.”
For the larger value Coronavirus Business Interruption Loan Scheme (CBILS), which provided loans of up to £5m, just 29 businesses were flagged as suspected frauds as of January 31, 2025.
This compared with 33 firms suspected in 2023.
A spokesperson for the Department for Business and Trade said lenders were continually adapting their processes for identifying fraud so the figures will change over time.
They added: “We continue to work across government, with law enforcement, and commercial lenders to tackle fraud in relation to the Covid debt schemes.
“This government will always protect taxpayers’ interests, which is why we have also appointed Tom Hayhoe as Covid counter-fraud commissioner to scrutinise Covid spending and work to recoup public money lost in abhorrent pandemic-related fraud.”
In total, there were 260,912 bounce back loans issued to construction companies and 14,688 CBILS loans given to the sector.
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Ian Weinfass