What is Bounce Back Loan Fraud?
The cabinet office has spoken about 2 types of Bounce Back Loan fraud but hasn’t given much information on if/how people found guilty will be prosecuted.
Soft Fraud – this term has been used for borrowers who have exaggerated turnover in order to claim a Bounce Back Loan.
For example, their business was affected by Covid; they weren’t in insolvency proceedings, they were still planning to trade so they were entitled to claim. The company only turned over £50K but they applied for a £50k bounce back loan when they should have only applied for £12,500
Hard fraud – this is where the bounce back Loan scheme has been deliberately defrauded.
Examples of this are:
- impersonating an individual in order to apply for a bounce-back loan
- applying for multiple bounce back loans with different lenders
- using people to take out loans then immediately liquidating the company or filing for bankruptcy
Although it’s not 100% clear as to the repercussions of committing bounce back loan fraud yet, the range of sentences and orders are likely to be:
- confiscation orders
- director disqualification
- civil recovery orders
- civil settlements
- civil penalties
Personally, I have started to speak to more people who may have exaggerated turnover when applying for a bounce back loan.
As with most things the earlier that you take advice on something like this the more options you will have available.
I hope you have found this useful.
All the best.