What is deemed Bounce Back Loan fraud?

Understanding misuse of Bounce Back Loan funds

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.

What is Bounce Back Loan misuse or fraud?

Problems surrounding Bounce Back Loan misuse occur, however, when instead of using the Bounce Back Loan to help inject working capital into the business, 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.

It may also be the case that a director obtained a Bounce Back Loan under false pretenses by over inflating their company's turnover, or by applying for a Bounce Back Loan for a company incorporated after 1st March 2020. This would likewise be deemed Bounce Back Loan fraud even if the funds were then spent for legitimate business purposes.

Misusing Bounce Back Loan funds, or falsely obtaining a Bounce Back Loan, is deemed to be fraud and this 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. You may even be investigated by the Insolvency Service and face director disqualification, as well as a heavy fine.

“Called for help with closing non-trading companies and Chelsea advised me on what to do and instead of taking advantage as others would by taking on the case and charging loads. She gave me a solution that would cost £20. Very pleased with the service and thankful for Chelsea’s advice.”

AB

 

Contact the Real Business Rescue Team today

Chelsea Williams
Business Debt Expert

I’m worried I may have fraudulently used my Bounce Back Loan – What can I do?

If your company is able to continue to make the necessary repayments on its Bounce Back Loan, you will not be investigated for potential fraudulent use of the monies. It is only when a company enters into a liquidation process that investigations regarding the use of the loan will be started.

If 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.

Get a Quote Find Your Nearest Office

The experts at Real Business Rescue are here to help you if you have a Bounce Back Loan 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.