What to Do If Your Business Is Accused of Bounce Back Loan Fraud

On 4 May 2020, the Bounce Back Loan scheme (BBLS) was launched. The purpose of this loan was to reduce the impact of the coronavirus pandemic on businesses by offering them up to £50,000 or 25% of their annual turnover. By doing so, the government hoped to reduce the number of businesses closing down because of lost trade, disruption of cash flow, or deferred revenues caused by COVID-19. 

Although this scheme helped thousands of businesses across the UK, its implementation was rushed and loans were given out with minimal checks. Because of this, it is estimated that between £3.3bn and £5bn has been lost due to fraud. 

Thousands of companies are being investigated or accused of BBLS fraud. While some of these may be genuine cases of fraud, many businesses have been caught out because they simply misunderstood the application rules. Others may have used the loan entirely legitimately and now are unjustly facing an investigation.

Whatever the case may be, if your business has been accused of Bounce Back Loan fraud, we recommend seeking expert help for serious fraud defence.

To find out more about the Bounce Back Loan scheme, how it was exploited and consequences of BBLS fraud, check out the article below.

What is the Bounce Back Loan scheme?

In 2020, the COVID-19 pandemic disrupted the lives and incomes of millions of people across the world, but for small and medium-sized businesses, the pandemic has been particularly devastating. The Bounce Back Loan Scheme was announced as part of a series of measures that the government introduced to support smaller businesses during this difficult time.

Some other schemes that were launched during this period include:

  • Covid Corporate Financing Facility
  • Coronavirus Business Interruption Loans
  • Coronavirus Large Business Interruption Loans

The aim of these schemes was to help businesses who were successfully trading before the pandemic to stay in business.

The loan allowed businesses to borrow between £2,000 and £50,000 or 25% of their annual turnover. These businesses did not need to worry about repaying the loans for the first 12 months, with the government also covering the interest accumulated during this time. After the initial 12 months, the interest rate of the Bounce Back loans is 2.5% and the business has 6 years to repay. 

It should also be noted that the government provided a 100% guarantee against the outstanding balance (both principal and interest). 

The urgency of the coronavirus pandemic pushed the government to implement schemes like the Bounce Back Loan quickly. Unfortunately, this resulted in a lack of checks on the businesses applying to the scheme and caused a number of fraudulent claims.

So far, 22,000 loans have been identified as duplicates, over 1,000 loans were given to dissolved businesses, and a further 1,500 was given to businesses that were established after 1 March 2020. These numbers are expected to continue growing as the investigations continue. 

Although countless of these are believed to be deliberate acts of fraud, there are many businesses who applied to the scheme without properly understanding the rules. 

Why might you be accused of BBLS fraud?

If you are being accused of BBLS fraud, it may be because an error was made when applying for the loan. Some of the reasons you may be accused of BBLS fraud include where your lender believes that you:

  • Applied even though you are not eligible
  • Started a fake business to claim the loan 
  • Impersonated an existing business
  • Applied to multiple lenders for the BBL loan

If you have been accused of BBLS fraud and you are unsure why, or don’t know how to proceed, contact a serious fraud defence solicitor for guidance and support.

What are the penalties for BBLS fraud?

Depending on the type of fraud, the level of your involvement and the amount of dishonesty, there are a number of different penalties for BBLS fraud. These include, but are not limited to:

  • Fines
  • Imprisonment
  • Civil recovery orders
  • Civil penalties 
  • Enforced compensation
  • Serious Crime Prevention Orders 

What to do if you have been accused of BBLS fraud

Across the UK, banks like Lloyds and Barclays lent billions of pounds to businesses for the Bounce Back Loan. These banks are now employing hundreds of people to help them track down the businesses that exploited the scheme and reclaim the money they lost. 

If your business has been accused of Bounce Back Loan fraud, it’s crucial that you get legal help immediately. Doing so will help you understand the situations and see what options are available to you.  

Our expert serious fraud defence solicitors are here to help you with any enquiry you have on the BBLS, all you need to do is give us a call at our offices in Bournemouth, email mail@renshawderrick.co.uk or fill out our online enquiry form.