Funding Circle has claimed £7.6mn from the Treasury's Growth Guarantee Scheme, accounting for nearly two-thirds of all payouts to cover defaulted loans. The FTSE 250 lender's claims are ten times higher than any other participating institution, despite its £240mn in loans representing just 12% of the total £2bn issued under the 2024 programme. The scheme guarantees lenders against 70% of losses on loans to businesses with turnover up to £45mn.

HSBC led lending volume with £313mn in GGS loans but claimed back only £291,000, while Barclays issued £145mn in loans without making any claims. Funding Circle issued 2,776 loans - nearly double Close Brothers' 1,478 loans. This disparity raises questions about lending standards and borrower risk profiles across participating institutions.

Daisy Cooper, Liberal Democrats' Treasury spokesperson, called the figures concerning and said the government faces questions about loan handling. The pattern echoes pandemic-era criticisms, including Starling Bank's £28mn provision for compliance issues with Bounce Back Loans. British banks have generally reduced SME lending, which fell to its lowest level since 1998 last year.

A senior banking source argued that helping underserved businesses access finance justifies taxpayer compensation when some succeed. However, the high claim rate suggests potential misjudgment of credit risk or aggressive lending to higher-risk borrowers under government protection.