Emergency loans taken out to buy supercars and houses

FRAUDULENT use of the Government’s coronavirus Bounce Back loans will be prosecuted, the Treasury has warned after it emerged some business owners have attempted to use the money to buy houses and supercars.

The scheme is designed to help businesses that are struggling because of the pandemic by giving them access to loans up to £50,000, which are interest free for the first year. However, it has emerged that a minority are attempting to abuse the scheme.

Saba Amari, of Amari, a supercar dealership, said one client tried to put a deposit on a new Lamborghini SVJ worth more than a quarter of a million pounds using money from a Bounce Back loan.

The number of requests from buyers trying to purchase using the loans is in the double digits and is increasing, said Mrs Amari. Amari has not accepted requests from clients wishing to buy with the loans.

To take out a Bounce Back loan, the borrower must confirm to the lender that the loan will only be used to provide economic benefit to the business, and will not be used for personal gain.

Chris Sykes, of mortgage broker Private Finance, said he has had requests from landlords trying to buy low value buy-to-let properties using a Bounce Back loan as the entire deposit, as well as people trying to buy their first home.

In response to the claims, an HM Treasury spokesperson said: “We’ve been clear that the loans must be repaid and banks are undertaking appropriate precautions against fraud, including customer checks and the monitoring of transactions. Any fraudulent applications can be criminally prosecuted.”

A spokesperson from the British Business Bank, which provides support for businesses, said the Bank is closely monitoring the situation.

It has set up a Fraud Prevention Collaboration Working Group that is cohosted weekly by UK Finance, the lending body, and Cifas, the fraud prevention service.