Debt Collection Agencies to Recoup Government Bounce Back Loan Payments
14th October 2020
Billions of pounds worth of government loans, designed to support businesses through the pandemic, could eventually be recovered by debt collection agencies on behalf of banks, according to The Times. Bounce Back Loan Payments.
The Bounce Back Loan Scheme (BBLS) provides loans of up to £50,000 to businesses struggling in the face of the Coronavirus pandemic. To date, it has delivered £38 billion to 1.3 million businesses.
Because of the huge volume of loans due to be collected, and the potential vulnerability of the businesses who took out loans, banks have predicted there will be significant challenges in managing the collection process.
According to the Business Banking Resolution Service (BBRS), over 40% of businesses that have accessed the government loan schemes have no intention of paying them back – either because they believe the government will not pursue the debt, or that they do not expect to repay them.
Any unrecoverable debts would be returned to banks, who would in turn claim back on the state guarantee placed on every loan under the scheme. The National Audit Office has warned that a failure to recover loan payments could cost the government £26 billion.
Bounce Back Loan Payments – Debt Collection Agencies are up to the task
Debt collection is a specialist skill that requires dedicated resources, processes, and training to do in a fair, ethical and effective manner. Banks realise this, which is why there are talks of outsourcing this task to debt collection agencies, who are set up specifically to deliver such services. It is hoped this will reduce the burden on the government financially. With the sheer number of businesses that have taken out loans across the country it is thought that the government will lead a centralised “utility” of debt collection agencies that will deal with defaults on bounce back loans.
DCBL, as part of the Direct Group, has a full range of capabilities, ranging from highly effective letter driven debt recovery and pre-court agent visits to litigation and High Court Enforcement.
Read more about our Debt Recovery and High Court Enforcement services, and if you are in need of our expert debt recovery services get in touch with us today.
