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What’s happening with Bounce Back Loan fraud in England?
In recent years, we have seen a surge in financial support schemes to aid businesses grappling with economic uncertainties. One major example of this is the introduction of the Bounce Back Loan scheme during the Covid-19 pandemic.
While these initiatives have been a lifeline for many business owners, they also open the door to potential Bounce Back Loans fraud.
At Britton and Time, we have already successfully defended businesses who have been wrongly accused of Bounce Back Loans fraud in England and Wales.
Looking to cut to the chase? If you need a solicitor to help you resolve your fraud case, just call us on 020 3007 5500, or submit a contact form.
What is a Bounce Back Loan?
The Bounce Back Loan Scheme was a financial support measure introduced by the government to assist small and medium-sized businesses impacted by the COVID-19 pandemic, allowing them to borrow up to £50,000.
The government guaranteed 100% of the loan, with no fees or interest to pay for the first 12 months. A low, fixed interest rate of 2.5% per annum applies after 12 months.
However post-pandemic, there have been discussions about Bounce Back Loans fraud and the recovery of these loans by fraud solicitors, as the scheme prioritised rapid access over detailed checks.
What counts as fraud?
Fraud is the deliberate act to obtain an unauthorised benefit, either for yourself or your business, by using deception, false suggestions or other unethical means.
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How can you be caught for bounce back loan fraud?
Bounce Back Loan fraud may go undetected until the loan repayment isn’t kept up or the company goes into insolvency. This is when there’s an investigation to find out if there was a misuse of funds.
A misuse of funds can include:
- Sending the money to a third-party that isn’t related to the business e.g. friends or family
- Transferring money into a personal bank account
- Purchasing assets for non-business use
- Using the loan to provide an increased salary or dividends to directors at the expense of the business
A recent example of a fraud case, where the treasurer ended up in 36 months in prison, consisted of a syphoning of funds into his personal account, using much of it for gambling.
It is unlikely an investigation will take place if you took the loan out for legitimate reasons and you’re continuing to repay.
What happens if you’re found guilty of Bounce Back Loan fraud?
Engaging in fraudulent activities, such as providing false information or using deceptive practices to obtain a Bounce Back Loan, will have severe consequences for you and your business.
Not only does it jeopardise the financial stability of your business, but it also exposes you, as an individual, to civil litigation.
Some of the punishments for fraud include:
- Fines
- Business insolvency
- Imprisonment
- Director disqualification
The defendant will either be sent to the Magistrates’ Court for pre-trial hearings and trial or the Crown Court, depending on the seriousness of the fraud.
What is Director Disqualification?
One of the gravest punishments of Bounce Back Loan fraud is the possibility of director disqualification.
If a director is found guilty of Bounce Back Loan fraud as well as any fraudulent application for financial aid, they may face director disqualification.
If you’re disqualified:
- It will last 15 years
- You can’t be a director of a registered UK company
- You can’t be a director of an overseas company with connections to the UK
- There is to be no forming, running, or marketing for a company
These sanctions can significantly impact someone’s life as a professional and their financial future.
Struggling with a fraud case?
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How can a Solicitor help with Bounce Back Loan fraud?
Bounce Back Loan solicitors understand the landscape of fraud-related civil litigation claims. Having a legal expert by your side is not just beneficial; it’s crucial.
A lawyer specialising in Bounce Back Loan fraud – and other financial and business law – can provide the best chance of successfully defeating a claim by the Secretary of State for Business, Energy and Industrial Strategy.
Mounting a robust defence against an allegation of Bounce Back Loan fraud takes time and an analysis of the company’s financial position at the time the Bounce Back Loan was taken out.
How can a solicitor mitigate the risks?
Solicitors can work on your case and help to minimise any potential consequences of a fraud case.
Compliance and due diligence:
Solicitors can ensure that your business practices adhere to legal standards, minimising the risk of inadvertently engaging in fraudulent activities.
Risk assessment:
A specialist Bounce Back Loan solicitor can assess the potential punishment associated with fraudulent financial support applications. They can also offer advice on how to avoid legal complications, and minimise the risk of any period of disqualification.
Defence in litigation:
If faced with civil litigation, having a Bounce Back Loan lawyer is your best line of defence to discharge the allegations. Your solicitor will build the strongest case, challenge evidence, navigate the law, and advocate on your behalf in court.
Financial support schemes can come with inherent risks, despite their intent to act as a beacon of hope for struggling businesses.
Fraudulent Bounce Back Loan applications can lead to serious legal consequences, including director disqualification. You cannot overstate the role of a legal professional, especially during such a tough business landscape.
Seeking legal guidance from a Bounce Back Loan lawyer is not a sign of guilt. It’s a proactive measure to safeguard your business and personal reputation.
If you need objective advice about a fraud case, please book a consultation with us at Britton and Time. You can call us on 020 3007 5500 or email [email protected]
How can Britton and Time Solicitors help?
We know how stressful fraud allegations can be. That’s why our initial consultations with our Bounce Back Loan solicitors offer you:
- Unlimited time to go through the details of your case and ask any questions you
- An overview of your legal standpoint and your available options
- A precise time and fee estimate for your case
To arrange your initial consultation with one of our solicitors, simply call us on 020 3007 5500.
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