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Bounce Back Loan fraud

Bounce Back Loan fraud written by John A Waller, Director. July 29th,2022.

Bounce Back Loan Fraud and Understanding misuse of funds.

Bounce Back loans were introduced to SMEs in the UK in May 2020, as the COVID-19 pandemic affected the country’s economic stability. However, as different sectors experienced problems, there were no strict criteria for using bounce back loans. Instead, borrowers remained advised they could use the funds to generate economic benefits for the company.

This means using the Bounce Back Loan to increase working capital, adapt business operations, allow the company to remain viable, continue trading and refinance existing company debt. These remain good ways to use loans, as they can all benefit the company and strengthen its viability in the future.

Bounce-back loans, however, can be used to pay wages, salaries for company directors, and legitimate dividends. However, rules for taking illegal dividends and ensuring sufficient profits in the company still apply.

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Bounce Back Loan misuse or fraud?

Problems related to the use of bounce back loans abound. However, instead of using the bounce back loan to inject additional working capital into the business, you used the funds to buy items for yourself, such as a car caravan or a villa deposit. Furthermore, not drawing the money through your PAYE program or as a legitimate dividend correctly presents problems for the recipient of such funds.

Misusing bounce back loans could have serious consequences if the company cannot repay the loan in the future and your company enters liquidation. If found guilty of misusing Bounce Back Loan funds, this could be a fraud, and you may be personally liable for repaying the outstanding balance due on the loan. You may, however, face an investigation by the Insolvency Service, ultimately disqualified and fin