The companies who have borrowed money from banks under Bounce back Loans (BBL) without fulfilling the qualifying requirement could be facing trouble in the days to come.
https://www.gov.uk/government/news/fraudulent-companies-shut-down-after-abusing-covid-loan-support
This is based on our views on a recent interesting case where a haulage company based in the West Midlands have their operator licence revoked. This followed a public inquiry into the company by the traffic commissioner for the West Midlands.
The traffic commissioner found that almost all the company’s financial resources had been provided by a £50,000 Bounce Back loan in May 2020. The Bounce Back Loans scheme was launched in May 2020 to provide financial support to businesses across the UK that were losing revenue, and seeing their cashflow disrupted, because of the COVID-19 pandemic. The scheme allowed qualifying small businesses to borrow between £2,000 and £50,000 with no fees or interest to pay for the first 12 months.
However, the company in question had a turnover that was far below the £200,000 necessary to qualify for such a loan – the maximum permissible being 25% of turnover or £50,000, whichever is the lower.
There were also issues with the company’s bank statements that were provided as evidence of financial standing. The company also had a very poor maintenance record and numerous tachograph infringements.
Please book a free consultation with us if you wish to know more about the implication.
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