Bounce Back Loan Fraud: Director Disqualifications

Introduction

Statistics from the Insolvency Service reveal concerning trends about the misuse of the Bounce Back Loan support scheme – not something that has surprised us we might add.

Between April 2022 and June 2023, 1,200 directors were disqualified for various offences. Alarmingly, more than half of these disqualifications were related to abuse of COVID-19 support schemes. Of these, 611 were specifically tied to Bounce Back Loan offences. The Insolvency Service has already criminally prosecuted nine directors for BBLS-related offences.

Tackling loan abuse is a major focus of their enforcement work. The misuse of these schemes not only defrauds the government but also impacts public services that could have benefited from these funds.

The Economic Fallout

According to the National Audit Office, £46.5 billion was paid out through 1,531,095 loans. Despite these substantial payouts, many businesses have yet to recover to pre-2020 levels of economic activity. Fast forward to 2024, and these loans have become more of a burden than a boon for many companies, especially with rising inflation and interest rates.

The National Audit Office reports that a staggering £4.9 billion has likely been lost to fraud, and an additional £12.1 billion may never be recovered. This represents a massive blow to both the government and honest businesses in need of support.

We cannot emphasise the importance of documentation and financial monitoring for directors. While investigations into directors’ actions are standard in any creditors’ voluntary liquidation process, they shouldn’t be a source of stress for those running their businesses legally.

Seeking Professional Help

Whether you’re dealing with loan arrears or other economic challenges, professional advice can be a game-changer. We offer a free initial consultation to help business owners understand their options for restructuring or even efficient closure procedures.