To get ahead of the anticipated rise in company collapses next year, the Insolvency Service has instructed insolvency practitioners to report all fraudulent coronavirus loan applications to them.
This executive agency of the Department for Business, Energy and Industrial Strategy, has written to companies warning that “if it appears that a person has applied fraudulently” for the Government-supported Bounce Back Loan (BBL) or the Coronavirus Business Interruption Loan Scheme (CBILS), then “it is the duty of the insolvency practitioner to consider their reporting obligations”.
Currently, the National Crime Agency is warning the Government that these bounce-back loans, for small businesses, are targeted by criminals as the loans rely on self-certification to determine eligibility, plus there are inadequate credit checks and verification.
The state British Business Bank, which administers the BBL scheme, also warned the department of this before the launch of the loan in May, stating that it was “vulnerable to abuse by individuals and organised crime”.
As of October, nearly 1.5 million UK companies utilised the £65.5 billion funding through the coronavirus-related lending schemes that the Government provides.
From March, nearly 1.4 million micro and small businesses received support through the BBL scheme, and 77,900 through the CBILS.