BUSINESSES have received more than £100million in support through one of the government’s main coronavirus loan schemes.

However suspected fraud and inability to repay the borrowed money could cost taxpayers across the UK tens of billions, an official report has warned.

Companies in Blackburn with Darwen’s two parliamentary constituencies had received 3,907 loans worth £122.1m through the Bounce Back Loan Scheme by October 4, the latest government-owned British Business Bank figures show.

The loan scheme started in April and helps small and medium-sized businesses hit by the pandemic borrow between £2,000 and £50,000, capped at 25 per cent of their turnover.

The Treasury backs the loans, which are handed out by commercial lenders, and borrowers do not have to pay fees or interest for the first year.

But a report by the National Audit Office, the UK’s public spending watchdog, warned the government could face huge losses due to fraudulent claims and firms being unable to repay.

Across the UK, 1.3 million payments worth £38billion had been issued through the loan scheme by October 4.

The British Business Bank – which delivers the scheme – and the Department for Business, Energy and Industrial Strategy estimates that 35 to 60 per cent of borrowers could fail to repay the money.

The audit office said this could lead to a maximum of £26bn billion in losses if lenders pay out £43bn by November 4, although it warned the estimates are “highly uncertain”.

The deadline for applications has been extended to the end of November.

Audit office head Gareth Davies said the government had acted decisively to get cash into businesses’ hands “as quickly as possible”.

“Unfortunately, the cost to the taxpayer has the potential to be very high, if the estimated losses turn out to be correct,” he added.

“Government will need to ensure that robust debt collection and fraud investigation arrangements are in place to minimise the impact of these potential losses to the public purse,” Mr Davies said.

The House of Commons Public Accounts Committee, which oversees government spending, will hear evidence about the scheme at a hearing on November 5.