Wednesday, 07 October 2020 23:30

Bounce-Back Loan Companies Starting To Liquidate

Companies that took out loans of up to £50,000 through a Government-backed Bounce Back loan scheme have already started to liquidate, meaning they won't have to pay back the loans.

In March this year, the Government announced that they would automatically accept small business loan applications up to £50,000 or 25% of their previous years turnover, whichever was the lowest. The scheme was set up to help businesses that could not pass the standard verification processes that lenders have in place to filter out fraudulent and unaffordable applications.

The Government was warned that the scheme was wide open to abuse from fraudsters. Applicants didn't have to prove income, and as the loans were unsecured, the loans wouldn't need to be repaid if the company went out of business.

Almost six months after the scheme started and thousands of companies that borrowed the maximum £50,000 are already beginning to go into liquidation, filing for closure. Due to the sheer number of companies involved, it will be almost impossible for the Government to investigate more than a handful of companies to check for fraud.

Without any hope of ever recovering the money, up to £26 Billion may have just disappeared into thin air. The Chancellor says that the fraud losses were worth it because at the time the majority of UK small businesses needed an emergency injection of cash. Whilst we have some sympathy for that position, we can't agree that opening a blank cheque book for anyone was a good idea.

This BBLS will turn out to be a devastating loss to the taxpayer. Many hard-working people will be dismayed when future enquiries into the bounce-back loan scheme are published. A budget more immense than the Ministry of Defence has just disappeared.

The only way the Government can rescue the situation now is to pursue every single director who fraudulently applied for a bounce-back loan and prosecute them. If the public does not see wrongdoers being punished, confidence in the public purse will be lost forever.

The last thing the public need to see at the moment is company directors sending their companies into bankruptcy whilst driving about a new McLaren or Ferrari courtesy of Mr and Mrs taxpayer.

Comments (1)

This comment was minimized by the moderator on the site

this was always going to be open to fraud. The amount of money lost to people have no intentions of ever making repayments is scandalous.

Those in charge have lost control of government money, is now a free for all. There is almost zero chance that the government will enforce any kind of seizure of fraudulently obtain funds.

only a few minor people will be prosecuted and they will get a slap on the wrist like usual

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