FILE PHOTO: The HSBC building is seen in Canary Wharf, London, Britain, October 8, 2008. REUTERS/Kevin Coombs/File Photo

(Reuters) - HSBC Holdings Plc HSBA.L has agreed to pay about $2 million to settle a civil fraud lawsuit that alleged the bank improperly attempted to get reimbursement from the federally backed U.S. Small Business Administration (SBA) on bad loans it knew were based on fraudulent or potentially fraudulent information.

Under the SBAExpress loan program, designed to help startups and small businesses, the SBA guarantees up to half the value of loans made to companies by lenders such as HSBC.

According to a complaint made by the U.S. government in federal court in Manhattan, HSBC sought reimbursement for 42 defaulted loans without revealing that borrowers may have submitted false information to the bank to obtain many of the loans, or that the bank had included them on an internal list of fraudulent or potentially fraudulent loans.

The case was initially brought by a whistleblower under the False Claims Act, and the U.S. government intervened in the case.

As part of the settlement, HSBC admitted and accepted responsibility for not informing the SBA of all of the facts indicating that borrowers may have submitted false information on the loans, or that it had identified these loans as fraudulent or potentially fraudulent. (bit.ly/2pfnq9a)

An HSBC spokesman did not immediately respond to a request for comment.