The Department of Economic Development has tightened up procedures on a loan scheme after it discovered a business had not used the money for the intended purpose.

Under the department’s Green Business Loan scheme, a total of £229,009 has been loaned out to 24 companies.

The majority has since been repaid by businesses.

However, in one instance, a loan was granted to a business to install an energy saving device, but it was never purchased.

Tim Baker (Ayre and Michael) raised the issue in the House of Keys on Tuesday.

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He said the method of paying out loans in advance, rather than reimbursing a business after a purchase, was ’in sharp contrast to accepted practice’.

He asked if there had been adequate oversight of the company in question.

Economic Development Minister Laurence Skelly said that particular loan was for £18,788 and the DED was liaising with the Attorney General’s chambers.

’We do believe that that was not installed, but we did follow the regulations in terms of verifying that this particular business was up-to-date with their income tax and VAT repayments,’ he said.

’However, I can also confirm that we have also tightened our regulations and restrictions around this particular scheme.’

Invoices will have to be produced before loan payments are made.

The Green Business Loan Scheme offers loans of 100 per cent towards the cost of projects that improve energy efficiency, up to a maximum of £20,000.

The 24 loans made were anticipated to help generate a total of £84,000 savings per year, said Mr Skelly, and cut carbon emissions by 224 tonnes per year.