UK banks have raised almost £6 million by charging inflated loan rates to small business insurance customers, it has been revealed.
Over 5,800 business insurance customers that have drawn down their loans as part of the government's £1.3 billion lending scheme have typically had to pay 1.8 per cent of the loan in 'administration fees' and accept a 6.75 per cent rate of interest, according to the Daily Telegraph.
The newspaper stated that both charges exceed standard industry levels.
Spokesperson for the Federation of Small Businesses Stephen Alambritis said: "This scheme should be the cheapest in town. The government should look at these charges and bring them in line with the charges imposed by the partially state-owned banks."
Last week, the Department for Business, Innovation and Skills revealed that business insurance customers have drawn down over £580 million in loans under the government's Enterprise Finance Guarantee scheme since the start of the recession.
