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:

  • imprisonment
  • confiscation orders
  • director disqualification
  • fines
  • 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.
Chris

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