In the UK, the bounce back loan has cost the economy an estimated £46 billion. However, despite the fund acting as a lifeline for small businesses, large scale criminal fraud operations have targeted the scheme for financial gain. The damage caused by the fraud has caused various issues for the UK’s governing authorities and has seen over 43,958 loans applications, worth 1.6 billion, being blocked by lenders due to suspected fraudulent activity.
What Is The Bounce Back Loan Scheme?
The government implemented the Bounce Back Loan Scheme to help businesses combat the hardship caused by the covid-19 pandemic. The bounce-back loan provided small to medium-sized companies with a loan with an interest rate of just 2.5%. Businesses could borrow between £2500 to £50,000 depending on their turnover.
The loan was very favourable by businesses as they were not required to pay anything back for the first year. Furthermore, the government fixed the interest rate at 2.5%.
What Is Bounce Back Loan Fraud?
There are two types of fraud involved within bounce back loan fraud. These types of fraud include:
Hard fraud is a large-scale criminal activity set up to defraud the bounce back loan scheme for monetary gain. Typically, this includes the following:
- Fraudulent activity buying a company set up before the 1 March 2020, so that they could take advantage of the scheme.
- Impersonation of legitimate businesses or individuals.
- Submitting multiple fraudulent applications across different lenders.
- Acquiring money mules to take out loans on your behalf and then filing for bankruptcy.
Soft fraud is whereby businesses exaggerate their legitimate claims to acquire a larger loan. Most commonly, businesses commit this type of fraud by overstating their turnover.
Who Is Investigating Bounce Back Loan Fraud?
Due to the severe element of crime involved within bounce back loan fraud, the UK has numerous authorities currently prioritising their efforts towards eliminating bounce back loan fraud.
The following authorities are investigating bounce back loan fraud:
- National Crime Agency (NCA).
An initial mechanism that has been implemented to both investigate and prevent criminal fraud is red-flag indicators. The bounce back loan prevention scheme has been rolled out throughout the UK’s banking system and has been implemented to identify suspicious loans using comparative data.
What criminal offences can you be charged with for bounce back loan fraud?
If you willingly provide false information to secure a loan under the bounce back loan scheme, you may be liable for the following criminal offences:
- Fraud by false representation.
- Fraud by abuse of position.
- Conspiracy to defraud.
- False accounting.
- Money laundering.
What can happen during an investigation?
If the police or the National Crime Agency suspect you have committed bounce back loan fraud, they can put you under an investigation. Whilst you are under investigation, the police can seek a warrant to search your premises for relevant material to the investigation.
Typically, an investigation will begin with you either being arrested or invited for a police interview. If this is the case, you must seek the advice of a criminal defence lawyer. A lawyer can prevent you from answering questions that may incriminate yourself.
What may be the penalities for bounce back loan fraud?
Sentencing guidelines for fraud can carry severe penalties, such as:
- Compensation and confiscation orders.
- Director disqualification.
- A Fine.
- Serious Crime Prevent Orders.
In some instances, the court may issue the individual with either a civil settlements order or civil recovery order.
How can a lawyer help you?
If you are under investigation or face criminal allegations for bounce back fraud, contact a lawyer. A lawyer can act on your behalf to respond to any enquiries raised by the NCA and counteract any claims of fraud.
The benefits of contacting a lawyer:
- A specialist litigation lawyer can provide clarity, advocacy, or representation.
- A lawyer who specialises in criminal fraud can ensures your best interests are fully protected.
- Understands the nuances of the fraud legislation and of how mitigating circumstances may be applicable to your individual situation.
Furthermore, a criminal defence lawyer can collect evidence and records on your behalf and build a strong case for your defence.
If you are facing an offence for bounce back loan fraud, you’ll need a criminal defence lawyer on your side. For more information regarding criminal defence, click here.
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