The Bounce Back Loan Scheme (BBLS) was announced on the 27th April 2020 and was put in place due to the coronavirus outbreak. This scheme enables small and medium-sized businesses established before the 1st March 2020 to access financial help quicker. The scheme allows a business to borrow from £2,000 up to 25% of the businesses turnover. There is also a £50,000 maximum lending cap on the borrowing.
The government guarantees 100% of the loan, and there won’t be any fees or interest to pay for the first 12 months. After this, the interest payable will be calculated at 2.5%. The loan can be settled at any point without any early repayment fee. The British Business Bank expects loans to be paid out in the region of between £38-48 billion by the 4th November 2020.
The National Audit Office (NAO) warns of a “very high level” of fraud risk and that taxpayer’s maybe left with the bill of unpaid loans to the tune of £26 billion. It is suspected that organised crime groups are involved in this fraud.
The state of businesses self-certifying their application details with limited verification, and no credit checks being performed by lenders for existing customers. This then poses a credit risk that the loans will not be repaid. Some people may not be able to pay back the loans. The bank lenders have also been approving loans as quick as between 24-72 hours.
It is feared that up to 60% of these emergency loans will not be repaid according to the governments spending watchdog. There has been evidence to suggest that organised crime groups are setting up bogus firms to make fraudulent applications before receiving the maximum lending of £50,000 each time.
The National Crime Agency (NCA) reported on the 27th October 2020 that a man in Hertfordshire had been arrested for fraud-related offences in relation to the Bounce Back Loan Scheme. He was arrested at his home address in Hoddesdon and during a search of his premises police recovered £17,000 in cash along with a number of prestige high-value watches.
The NCA branch commander, Simon Gower, made the following statement. “This arrest is the first by the NCA in relation to potential fraud against the governments Bounce Back Loan Scheme. The man arrested is suspected of falsely applying for the loan and allegedly using the money on personal items.” The NCA has warned that any fraudulent applications against the scheme may be criminally prosecuted for which penalties include imprisonment, a fine or both.
If you are being investigated or have been summonsed to court for any fraud-related offences similar to the one mentioned in this topic, I would urge you to get in contact with one of our team of specialist fraud experts who can assist you. We have a designated 24-hour line for legal advice. Please call 0800 2335822.