An analysis of the government loan scheme for struggling small businesses suggests criminals could have stolen more than £1.9bn from taxpayers.
The National Audit Office also says the UK’s five biggest banks will pocket nearly £1bn between them from the scheme.
Under the Bounce Back scheme, small businesses can borrow up to £50,000.
The government said it has tried to minimise fraud through lenders’ background checks.
Bounce back loans are 100% government-backed loans of up to £50,000, and were introduced to mitigate the huge pressure on small businesses after the economy went into coronavirus lockdown.
They do not have to be paid off for six years, and are interest-free for the first 12 months.
The £38bn loan scheme is an extension of earlier offers which some businesses complained they could not access as the lending criteria