Small business owners are struggling to access government guaranteed loans as concerns about fraud and future defaults lead banks to restrict access to the program.

This week the National Audit Office warned that up to £ 26bn of the £ 38bn already on loan under the rebound lending program may never be repaid due to business failures and suspected criminal activity.

Although Chancellor Rishi Sunak has extended the application deadline until November 30, many banks are no longer offering bounce loans or restrict them to existing customers. Businesses trying to switch banks report long delays caused by the volume of requests and additional security checks.

“The system they put in place to control potential fraud is now causing huge problems for able-bodied applicants,” said Mr. Rebond, an anonymous businessman from the north of England whose website has helped thousands of people access the loan program. “People watch the application clock go by and worry they won’t get the money. “

The ONA report highlighted comments two major lenders that can take four to 12 weeks for new customer applications to process, although the deadline is in eight weeks.

Only a handful of lenders, including Metro Bank, Barclays, Yorkshire Bank, Clydesdale Bank and Starling Bank, currently offer the bounce loan to clients who change – but much more stringent verification processes are used.

Several readers who participated in a Live Q&A on FT.com this week, said they had to travel hundreds of miles to attend face-to-face meetings with business leaders at bank branches so their identities and documents could be verified before the opening of accounts.

“I live in London and was advised to attend a date in Burnley, over 249 miles away, as there is no appointment available here,” said Yusuf Aizen, an independent trader.

Starling Bank maintains a “waiting list” for new customers to take out a bounce loan and advises on its website that credit checks will be performed on the company and directors as part of the process.

Conister, a Isle of Man-based digital bank, was forced to suspend access to the program when it received requests for £ 168million in bounce loans within 72 hours, the majority from the share new customers. It is still processing applications for the £ 10million it can lend, meaning around one in 15 applicants will get the funding.

However, small businesses on waiting lists that fail find it muddies subsequent requests to other lenders, who may require written proof from the other bank that they haven’t already obtained. a loan. Other readers have reported that their business accounts had been frozen after repayment of the rebound loan.

FT reader and small business owner Sally Chamnessi said it had created “months of turmoil” for small businesses struggling to access loans. “It took so long for many of us to find out why we were turned down that our options dried up,” she said.

Starling Bank said, “A number of customers are experiencing issues with the data that has been compiled to allow banks to verify that customers are not getting duplicate loans. This is an important anti-fraud check, to ensure that the money is on loan to genuine businesses. To support this, all lenders are required to consult a central bounce loan application database before lending. “

The Department of Business, Energy and Industrial Strategy said: “We have sought to minimize fraud, with lenders implementing a range of protections including anti-money laundering and customer checks. , as well as transaction monitoring controls. Any fraudulent request may be subject to criminal prosecution, the penalties for which include imprisonment or a fine or both.

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