Kent County Council has written off more than £1.5 million of taxpayer’s money after loaning it to businesses in the county which have gone bust.

The money was lent to eight companies, which later fell into administration, as part of a series of initiatives using central Government cash aimed at reigniting local economies after the recession.

The interest-free loans were handed out as part of three schemes – Expansion East Kent, TIGER and Escalate – which have lent more than £45.5 million to 216 firms in Kent.

As of September, five companies had ceased trading with another three in administration, according to a Freedom of Information request by Kent Business.

None of the schemes supported by Kent County Council are still lending money, with each having already committed all of its funding.

The cash comes from the Government’s Regional Growth Fund, which has invested £2.85 billion to help local businesses grow and take on more staff across England since its launch in 2010.

The council’s ambition, once loans are repaid, is to lend the money again to new firms looking for finance.

Expansion East Kent – the most high-profile scheme lending to firms in Ashford, Canterbury, Dover, Shepway and Thanet – deemed more than £1 million unrecoverable from five companies.

It was only able to recover £68,526 of a £400,000 loan it lent to Baypoint Leisure, a gym in Sandwich, because of its second charge creditor status. The centre was subsequently sold and reopened under the same name by new owners.

TIGER – which loaned to firms in Dartford, Gravesham, Medway, Swale and Thurrock – lost £485,000 after two firms went under.

Escalate – which covered firms in Hastings, Maidstone, Rother, Sevenoaks, Tonbridge and Malling, Tunbridge Wells and Wealden – wrote off £40,000 after DotImpact, based in Kings Hill, went into voluntary liquidation.

KCC Regional Growth Fund manager Jacqui Ward said: “The level of default which Kent County Council has experienced in its loans is very low.

“We are standing at 3% of bad debt which is extremely good. The expectation was we would experience more companies going into administration. The robustness of our application process helped us stop this.

“I have got companies I’m keeping an eye on but we have given ourselves a default variance of 20% across all our loans.

“We will continue to monitor firms. This was set up at a time when banks weren’t lending. It is a risky programme we run for start ups and expanding businesses who had difficulty getting finance elsewhere.”

KCC's bad debts, as of September 2015

Expansion East Kent

AC Wellard & Partners Ltd based in Dover (creditors voluntary liquidation)

Baypoint Club based in Sandwich (in administration as of September but since reopened under new owners)

Cuisine Frozen Foods Ltd based in Hythe (dissolved)

Flying Fish Hovercraft Ltd based in Sandwich (creditors voluntary liquidation)

InfoGuardian Ltd based in Canterbury (in administration)

Tiger

New Form Energy Ltd based in Faversham (in administration)

Social Advisors Ltd based in Greenhithe (in administration)

Escalate

DotImpact, based in Kings Hill (creditors voluntary liquidation)

Total cost of loans lost: £1,529,330