20th October 2021
Bounce Back Loans were made available to all SMEs in the UK across every sector and industry at the height of the Covid-19 pandemic. As different sectors were experiencing different problems at the time, there was no strict criteria on what the Bounce Back Loans could be used for, instead companies were told they could utilise the funds in any way which would provide an economic benefit to the business.
For some this meant using the Bounce Back Loan to improve working capital, modify business operations to allow for trade to continue, or even refinance existing company debt. These are all perfectly legitimate ways of utilising the loan as they all can be seen to provide a benefit for the company and improve its ongoing viability.
Bounce Back Loan funds could also be used to pay staff salaries, including director salaries and dividends, although rules around taking unlawful dividends and ensuring sufficient profits existed in the business, still applied.
Problems surrounding Bounce Back Loan misuse occur, however, when instead of using the Bounce Back Loan to provide a benefit for your company, you have spent the funds on personal purchases, or transferred the money to your personal account without extracting it from the business as a salary or dividend.
Misusing Bounce Back Loan funds in this way could have serious repercussions should the business be unable to repay the loan in the future and your company subsequently enters liquidation. If you are found guilty of misusing Bounce Back Loan funds, this could be seen as fraud, and you may be held personally liable for repaying the outstanding balance due on the loan.
If your company is able to continue to make the necessary repayments on its Bounce Back Loan, you will not be required to state what you spent the money on. It is only when a company is forced into closure that investigations regarding the use of the loan will be started.
If, however, your company is forced to cease trading and close down with an unpaid Bounce Back Loan still outstanding, what you used these funds for will be investigated. If there is reason to believe you have used these funds for personal rather than business reasons, you could find yourself being held personally liable for fraudulent use of Bounce Back Loan monies.
The experts at Real Business Rescue are here to help you if you have a Bounce Back Loan you know you are unable to repay, and can provide advice as to whether you have misused these funds. If so, we can talk you through your options and help you work out a plan moving forward.
Contact the experts at Real Business Rescue today on 0800 644 6080 for immediate help and advice on your Bounce Back Loan.