Thousands of construction firms suspected of pandemic loans fraud

The scale of construction fraud during the COVID-19 pandemic has been revealed in data released by the British Business Bank (BBB).

The figures were obtained through a Freedom of Information Act probe and show that 4,825 loans across two relief schemes are suspected of being fraudulently claimed within the construction sector.

When the pandemic struck, the Government created emergency loan schemes which offered businesses financial support. The measures were designed to ensure banks lent money to businesses despite the severe restrictions affecting their trade.

They were:

·        The Coronavirus Business Interruption Loan Scheme (CBILS) offered loans of up to £5 million for businesses with a turnover under £45 million. The loans were 80 per cent backed by the Government.

·        The Coronavirus Larger Business Interruption Loan Scheme (CLBILS) extended the standard CBILS approach to larger businesses.

·        The Bounce Back Loans Scheme (BBLS) offered up to £50,000 or 25 per cent of turnover, with streamlined application procedures and a 100 per cent Government guarantee.

Of the total of suspected fraud cases, 4,792 relate to the BBLS.

The three schemes closed at the end of March 2021. They were replaced by the Recovery Loan Scheme in April 2021. It is expected to run until 2024.

The pandemic meant businesses in all areas of the economy had to adapt to new ways of working, and paying off loans, while at the same time exploring business grants and future loans for growing the business.

Seek professional help

Accountants can offer expert advice in key areas, including testing ideas, warning of potential risks and advising on managing growth. Rapid growth can cause unexpected problems in areas like staffing and customer satisfaction. An accountant has the expertise to help you react quickly and effectively and make rapid growth a smooth process.

Funding

There are numerous grant schemes run by the Government, local councils, charities and commercial organisations. Many grants are aimed at specific industries or regions and range from a cash sum to discounts on equipment, such as money off broadband installation.

·        Bank business loan

·        Government-backed Start Up Loan

·        Short-term business loan

·        Peer-to-peer business loan

·        Cash advances

The accountant also will be able to provide sound advice on how to present your case to lenders to fund your growth policy.

Need help with growing your business? Contact our team today.