What happens if you do not pay back your Bounce Back Loan?

In the wake of economic uncertainties, the UK government introduced Bounce Back Loans (BBLs) as a lifeline for struggling businesses during the COVID-19 pandemic. However, companies are now facing difficulties in repaying the BBL.

With the convenience of these loans came the potential for misuse and fraudulent activities. Beyond the obvious financial implications, individuals engaging in fraudulent practices may find themselves entangled in a web of legal consequences.

BBL, aimed at providing quick financial support to small and medium-sized enterprises (SMEs), were designed to be easily accessible. This accessibility, unfortunately, opened the door for opportunistic individuals seeking to exploit the system for personal gain. As a result, various types of fraud have surfaced, leading to severe repercussions for those involved.

One prevalent form of fraud related to BBL is identity theft. Fraudsters often exploit the lax documentation requirements to secure loans under false identities. They may use stolen personal information to apply for multiple loans, leaving unsuspecting individuals with a mountain of debt and legal troubles. The government has been actively investigating such cases, and those found guilty may face criminal charges.

Another avenue for fraudsters is the inflation of business expenses. Some unscrupulous borrowers have sought to maximize their loan amounts by providing false or exaggerated financial information. This not only compromises the integrity of the BBL scheme but also exposes individuals to legal consequences, including hefty fines and imprisonment for false representation.

Money laundering has also become a concern in connection with Bounce Back Loans. Criminal entities may exploit the ease of obtaining these loans to legitimise illicit funds. The government, in collaboration with financial institutions, has been implementing stringent measures to track and prevent money laundering activities. Those found guilty of involvement in such activities face severe legal penalties, including imprisonment.

So, what happens if you do not pay back your Bounce Back Loan? What are the ramifications?  

If you cannot afford to repay the BBL granted, then interest will accrue on the principal loan resulting in a negative spiral of increasing debt. The lender could take legal action against your company, and it may also affect your credit rating. It could lead to a negative affect on your credit rating. It may also affect your ability to trade in the future and being able to obtain future funding.

If you are struggling to repay the BBL and worried about the consequences, contact Parker Walsh for free confidential advice. A licenced insolvency practitioner will run through your options and recommend a course of action.

^{Photo by Andrea Piacquadio}