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Can lenders reclaim fraudulent bounce back loans?
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Aug 2, 2022 · It has identified 673 suspects of whom 559 used the bounce back loan scheme. It's now thought £17bn could be lost , external to fraud, mistakes and companies going under.
- The chef, the model and Rishi's missing millions - BBC News
The most recent government report estimated 8% of all Bounce...
- Covid: £10m Bounce Back Loan fraudsters jailed - BBC News
Two men have been jailed for a total of 33 years for running...
- The chef, the model and Rishi's missing millions - BBC News
- 1. Bounce Back loans must be repaid
- 2. If we find misconduct
- 3. What misconduct means to you and your company
- 4. Bounce Back loan: case study 1
- 5. Bounce Back loan: case study 2
- 6. Bounce Back loan: case study 3
- 7. Bounce Back loan: case study 4
The money lent to your company under the Bounce Back loan scheme must be paid back, over 6 or 10 years, with payments starting 12 months after your company receives the loan.
If the money your company borrowed is not repaid, your company may be investigated by the Insolvency Service, even if it has been dissolved.
If we find there was misconduct in the use of the loan, action may be taken against you and your company.
Types of misconduct can include:
•providing false information on loan application
•the loan being used for personal benefit
As a result of the misconduct:
•your company could be wound up by the Court
•you could be disqualified as a director
•a Court Order may be made for you to pay compensation to your creditors
We may also look at whether other coronavirus (COVID-19) related assistance such as the Job Retention scheme (also known as furlough) and the Eat Out to Help Out scheme have been used correctly.
For more information on understanding your duties as a director, read our Company health check - keeping your business on track guidance
Two separate companies submitted false documents to at least 41 local authorities and the Government’s Bounce Back Loan scheme to secure £230,000 worth of funding put in place to support businesses during the pandemic, including Bounce Back Loans totalling £100,000, despite having never traded. Following an investigation by the Insolvency Service, the companies were wound up by the Court.
Read: Fraudulent companies shut down after abusing COVID-19 loan support
An application for a Bounce Back Loan of £30,000 was made by the director of a company which was in Administration and no longer trading, so would be unable to repay the loan. Although the money was used to pay one company creditor, the company’s other creditors were ignored and so not treated fairly. The director signed a disqualification undertaking which prevents him from acting as a director for 9 years from 25 October 2021.
Read: Insolvency Service cracks down on Bounce Back Loan abusers
A man obtained a Bounce Back Loan of £50,000 in May 2020 to which he was not entitled, for a business which had already stopped trading and the man having taken up alternative employment.
The money was also not used for the purpose it was intended, instead using it to repay third parties rather than to meet ongoing business costs.
He then declared himself bankrupt in October 2020, including the loan in his bankruptcy debts. As a result of his improper application for the Bounce Back Loan and the risk he posed to other creditors, he entered a bankruptcy undertaking which extended his bankruptcy restrictions for 10 years, meaning he is limited to what credit he can access, as well as not being able to act as a company director without the permission of the court.
Read: Scaffolder’s bankruptcy restrictions extended
A director obtained Bounce Back Loans of £150,000 across three companies which had never traded, and so were not entitled to the loans. The money was used for cash withdrawals by the director, and payments made to a company owned by a “close friend” and other third parties. He was disqualified from acting as a company director for 13 years as a result. His “close friend” was also banned as a director for similar reasons.
Read: 13-year ban for Rotherham ‘Bargain Basement’ director
Mar 10, 2023 · The most recent government report estimated 8% of all Bounce Back Loans could be lost to fraud or error. To date, 273 investigations have been launched - involving £160m of bogus loans.
Dec 23, 2021 · Two men have been jailed for a total of 33 years for running a £70m money laundering scheme, £10m of which came from fraudulent Covid loans. Artem Terzyan, 38, from Russia and Deivis ...
May 29, 2024 · Lenders stopped nearly £2.2bn in potential fraud from the Bounce Back Loan Scheme and last year we stopped or recovered £743m of overclaimed grants in the CJRS, SEISS and EOHO schemes.
- HM Treasury
- The Government introduced an unprecedented economic support package in response to the Covid-19 Pandemic.Almost £400bn of support protected tens of...
- We have set up the £100m Taxpayer Protection Taskforce of 1,200 HMRC staff to combat fraud, one of the largest and quickest responses to a fraud ri...
Dec 3, 2021 · Lenders can reclaim fraudulent Bounce Back Loans through the government guarantee, provided they followed the scheme’s rules. This offers limited commercial incentive for the lender to go beyond the scheme’s rules to seek a full recovery of overdue loans, fraudulent or otherwise.
The government failed to put adequate measures in place to prevent fraudsters stealing billions of pounds through its Bounce Back Loan scheme, the National Audit Office (NAO) has said.
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