Bounce Back and CIBILS Loans

Bounce Back and CIBILS Loans

If you believe you might need additional funding to support you through the Covid19 Pandemic then the closing date for applications under Bounce Back and CIBILS loan is 31st January 2021, so applications need to be submitted prior to that date. Applications can be for new funds or additional funds, if you have previously applied and might need further support.

There has been lots of information in the press about how easy these loans were to obtain (in particular Bounce Back) and the high level of fraud that has potentially occurred with applications and the subsequent use of those funds. It is important to remember that the funds have to be used for a business use and that when you apply you are effectively certifying that will be the purpose.

If those funds are later found to have been used for personal circumstances you can expect the lenders to pursue them rigorously, possibly through the use of insolvency practitioner  as the British Business Bank has stated they will need to ensure the lender has exhausted every avenue before they will reimburse the lenders for their losses under these loans.  This will no doubt extend to personal recovery from the Directors and the beneficiaries of misused funds.  The applications state they cannot be used for personal circumstances and have to be used for the economic benefit of the entity borrowing the funds.

There have already been a few arrests by the National Crime Agency for fraudulent applications and this is expected to increase as the banks review the loans they have already made and uncover more instances of fraud.

There is another potential issue that if the funds have been used to pay off debts, when you are knowingly insolvent, then that might lead to claims of preference against the Directors personally.

If you need advice on making a new application now, or need advice on the use of funds that have previously made available as you are unsure if they have been used correctly then please don’t hesitate to get in touch.   

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Bounce Back and CIBILS Loans