Are you as a business owner unsure about the future of your sole trading / Ltd company business and struggling to pay a Bounce back loan or the use of a bounce-back loan it may be worth seeking professional support?
It is considered preferable to deal with the matter now than to risk being investigated for fraud later if your firm runs into financial difficulties and needs to undergo a formal insolvency procedure.
A Bounce Back Loan (‘BBL’) has been given to several small and medium-sized businesses.
There were over 860,000 bounce back loans approved after 04 May 2020 to 15 June 2020.
The bounce back loans were very supportive in providing cash flow to many businesses at time of Covid-19 uncertainty.
HM Treasury has made it plain that any abuse of the system might result in fraud charges.
This article will assist you in considering the ramifications of what you may have previously done or plan to do with your Bounce Back Loan.
Bounce Back Loan: It is a debt and not grant
It must be remembered that Bounce Back Loans are a debt – not a grant – and accordingly have terms and conditions attached from the lender. Review these very carefully.
The following are some common conditions to be aware of:
- There is only one application per ‘group’. This is fraud if you have applied for more than one business that is owned or controlled by the same person.
- You can’t keep the bounce back loan and recovery loan scheme under the same company unless you refinance it fully with a bounce back loan or get approval on the recovery loan scheme and refinanced BBLS.
- The bounce back loan can be used for working capital or investment which supports trading or commercial activity within the UK. The company shareholders can’t use funds of BBLS for personal use.
- If the business that takes out the loan defaults on any other borrowing facility, whether it is with the same lender or not, the Bounce Back Loan will be considered defaulted.
- If your company needs additional finance during the BBL’s term, be very cautious about putting any type of security, mortgage, charge, pledge, lien, or encumbrance on its assets. Check the loan terms and conditions to see if this is permitted since it is frequently not.
Bounce Back Loan and Fraud :
“Our Bounce Back Loan Schemes are meant to keep firms going during this challenging period,” a Treasury spokeswoman recently remarked. We’ve made it clear that the loans must be returned, and banks are adopting proper anti-fraud measures, such as client checks and transaction monitoring. Any false applications will be pursued on a criminal level.”
Tens of thousands of loans were given to possible fraudsters involving multiple banks under the government-backed Covid bounce-back loan scheme, according to banking executives speaking in front of an influential committee of MPs. Thousands more were sent by banks to firms formed after the epidemic had begun, or to companies that had already been disbanded, exposing the scheme’s high level of deception. Banks lent more than £46 billion under the bounce back loan scheme, which was completely insured by the government and required very minimum checks on applicants of bank loans up to £50,000.
Can't Pay Back Bounce Back Loan
How is fraud being committed?
There have been a number of articles written recently about Bounce Back Loans being used to fund luxuries such as ‘Cars and new home purchase in personal names. There are many businesses where shareholders have transferred BBLS funds to buy their mainhome, personal BTL investments and buying cars.
Someone in the motor trade said “he’d sold cars to clients who had used Bounce Back Loan cash to fund part of the deals.
Directors of bankrupt limited firms frequently deal with liquidators, who utilize the company bank account as an extension of their personal bank account. When a liquidator requests for the many thousands of pounds in transactions to be returned, a director may become fully aware of the repercussions for the first time.
So many businesses will die, and the debt will go with them, a shop owner in West Drayton said. Others will just refuse to pay it back, putting the government’s willingness to pursue them to recover it to the test. It’s like free money if you have that mindset.
This is clearly false and a very difficult way of looking at the situation.
Remember that your lender has a legal responsibility to notify the National Crime Agency if they have a suspicion that you got or are using a Bounce Back Loan unlawfully as part of their Money Laundering duties. The case would be looked at, and you might face criminal charges.
Your bookkeeper or accountant has a similar responsibility to disclose any suspicions of fraud. Those under the ATT supervision can learn more about their anti-money laundering responsibilities here.
A motor dealer that is regulated as a ‘High-Value Dealer’ (a company that gets the equivalent of 10,000 euros or more in cash for the sale of products) has a similar responsibility.
Do you want to continue your company as it has potential to grow?
As a company director / shareholder, you know the best future of your business, its activities and potential growth of business. If there are currently cash flow issues and the company / business is not able to pay its creditors including bounce back loan, The company can take an advantage of bounce back Pay As You Grow (PAYG) option, If this has been utilized and still there are further issues, Please speak to debt solution expert who could offer an affordable repayment option on bounce back loan so you can continue with your business activities. If your business has trading difficulties, becomes insolvent and is not able to recover from that position then it could be placed in a formal insolvency process. If a company or sole trader cannot repay bounce back loan then our advisor will help you properly to pay off bbl.
Seek Professional and debt solution Help
If you are struggling to pay your bounce back loan and want support in running your business, Call us for a free and confidential personal appointment or telephonic appointment.
Rajnish Tyagi is an experienced FCA regulated debt advisor, who works for Acme Credit Consultants Ltd and he can be contacted on email@example.com or on phone 0203 318 0990 / 07779648018.
Your information will remain confidential with us.