A company owner who “grossly inflated” his turnover to obtain a Bounce Back Loan has been banned from doing business for nine years, it has been revealed.
The Insolvency Service, who led the investigation, found that the Wolverhampton-based director had abused the Covid-19 support initiative.
The report comes after the launch of the Bounce Back Loans Scheme (BBLS) in May 2020. Under the scheme, small businesses were able to apply for a “quick and easy-to-access” loan of between £2,000 and £50,000.
Experts warned that the scheme could be abused, however, with application forms comprising just seven questions with little oversight.
In June 2020, the director of soft drinks company applied for and secured a £50,000 loan through the BBLS.
The owner stated that the turnover of the business was £250,000, but company accounts ending January 2020 showed turnover of just £2,000.
Had the director stated the company’s true revenue, it would not have been entitled to any money under the scheme.
The man was banned from running any other companies for nine years after he admitted to “grossly inflating the company’s turnover to secure the Bounce Back Loan”.
Commenting on the investigation, Dave Elliott, Chief Investigator at The Insolvency Service, said: “[The director] had significantly inflated the turnover on the application to obtain a loan to which [the company] was not entitled.
“The Insolvency Service will not hesitate to investigate and use its powers against those who have abused the COVID-19 support schemes.”
In December 2021, the National Audit Office (NAO) concluded that counter-fraud activity for the Bounce Back Loan Scheme was implemented too slowly to be effective.
The Government estimates that 37 per cent of Bounce Back Loans worth £17 billion will not be repaid – representing borrowers who would want to repay but are unable to, and borrowers who took out a loan fraudulently.
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