As a response to Coronavirus, the bounce back loan scheme was designed to help businesses to access finance quicker. A great scheme, to keep small businesses afloat but it has been taken advantage of by some. In this article, we will break down the bounce back loan scheme and then take a look at an example of it being misused.

What is the bounce back loan scheme?

The bounce back loan scheme enabled SME’s to borrow between £2000 and 25% of their turnover, up to £50,000. Whilst applications for this scheme closed in April 2021, we are more interested in the repayment terms of this scheme. This is a loan, not a grant and therefore, yes, you do have to repay the loan. A recently publicised and severe example of what can happen for abusing the scheme was the owner of a Manchester Pizza takeaway company who has been jailed for 2 years for fraudulently claiming £20,000.

Is a loan right for you?

In the future, if a scheme like this is ever on your radar, we recommend that you ask for help first. In many cases, there are alternative loan options available to you, other than being tempted to borrow a large sum of money that puts you in even more debt, and is no more than a sticking plaster solution. At Anvil Business Advisory, we work with businesses to help manage their cash flow effectively, collecting payments on time and providing strategic direction to move your business forward.

Prevention is better than the cure

Our services are often associated with businesses in distress, but our services are used by clients to avoid falling into debt. Healthy businesses stay that way by managing their debt, maintaining cash flow and having a strong strategic direction. These are all the same things we focus on when we assist a business in difficulty. The moral is, Prevention is better than cure. Focus on getting things in order, to avoid them becoming an issue. If you feel like you’re “winging it” as a small business owner, and that those bad days are just around the corner, get in touch and let us help you stay ahead of the game.