COVID Bounce Back abuse

Posted on 16th April 2024 by Streets - Business Support

The Insolvency Service has recently published information confirming that a total of 831 company directors were banned in 2023-24 for Covid support scheme abuse, up more than 80% on the previous year, and that the average length of director disqualification for Covid misconduct in 2023-24 was almost 10 years.

The Covid Bounce Back Loan Scheme was introduced at the start of the pandemic in 2020. It helped small and medium-sized businesses borrow between £2,000 and £50,000 at a low interest rate, guaranteed by the government.

Businesses were entitled to a single loan of up to 25% of their turnover under the scheme.

Individuals could only use the loans for the economic benefit of the business and not for personal purposes.

Enforcement action taken against those that have abused the support schemes has ranged from companies being wound-up in court to criminal convictions, compensation orders and director disqualifications.

The Insolvency Service has successfully applied to have 1,430 directors banned for abusing Covid support schemes since it started investigating potential financial wrongdoing in this area in 2021.

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