Bounce Back Loan Fraud
Bounce-back loan fraud? Written by John A Waller, Director. June 18th,2022.
Bounce Back Loan (BBL) fraud and BBL misuse
So if you used your Covid-19 Bounce Back Loan (BBL) for a purpose other than providing economic benefits, you may have misused your Bounce Back Loan. For example,
the fraudulent use of your Bounce Back Loan includes:-
Understanding the misuse of Bounc Back Loan funds
At the height of the COVID-19 pandemic, Rishi Sunak created the BBL scheme. Importantly, they were specifically available to all SMEs in the UK in May 2020. At the time, different sectors experienced different problems, so there were no strict criteria for what the BBLs could be used for. Meanwhile, companies advised they could use the funds in any way that would help the company economically.
Therefore, this meant, however, using the bounce-back loan to improve working capital, change business operations to allow trade to continue, or even refinance existing company debts. Importantly, these remain legitimate ways to use the loan, as all seen as beneficial to the company, and improve its continued viability.
However, BBLs could be used to pay salaries, director salaries and dividends. Importantly, rules for taking illegal dividends and ensuring sufficient profits in the company still apply.
Have you received a BBL?
Do not worry: Thousands of other company directors across the UK continue to go through the same process. So regardless of your position and need to look for options, speak to an HBG Advisory team advisor. We provide a free initial meeting & confidential.
The team remain available now – 0808 612 5448
Bounce Back Loan fraud or misuse?
However, problems with the misuse of the BBL arise when the NNL is not used:-
- to introduce working capital into the business;
- You spent the money on personal purchases or
- Transferred money to your personal account without accounting for the money either through the PAYE scheme or a dividend.
The misuse of BBLs in this way could therefore have serious consequences if the company cannot repay the loan in the future, and your company subsequently enters liquidation. However, if guilty of misusing BBL funds, this could be considered fraud, and you may be personally liable for repaying the outstanding balance. Moreover, the Insolvency Service evidently can even investigate you and face disqualification and indeed a high fine.
I am worried I could have used my bounce back loan fraudulently.
So if your company can continue to make the necessary repayments on its BBL, directors remain not obliged to tell how you spent the money. However, the liquidator will investigate how the loan was used when a company remains forced into closure.
However, if your company remains forced to cease trading and close with an unpaid BBL still outstanding, what you used these funds for will be investigated. If you believe you used these funds for personal and not business. Therefore, you may personally be liable for fraudulent use of BBLs.
So, can I Liquidate with a Bounce Back Loan?
Can I liquidate with a Bounce Back Loan?
However, the liquidator will examine your BBL.
Do you need to talk to someone over a BBL?
In conclusion, you remain far from alone if your company struggles with debt, pressure on cash flow, or an uncertain future. We help company directors daily and give you the help and advice you need.
So call the team at HBG Advisory today on 0800 612 5448