A Co Down businessman who used a Covid bounce back loan to pay himself a hefty salary increase at a time when his company’s turnover was decreasing has been hit with a seven-year directorship ban.
French-Candian Jean-Philippe Bianco (65), with an address at Meadowhill in Downpatrick, was a director of JP Aerospace, which was involved in the repair and maintenance of aircraft and spacecraft.
But it went into liquidation in August 2021 owing more than £18,000.
In a case brought by the Department for the Economy, Bianco admitted permitting the misapplication of company funds and acting in a manner to benefit himself rather than the company by using the loan to pay himself a significant increase in salary.
A disqualification hearing was told that if he had not paid himself this increased salary, JP Aerospace would have had money available to reduce the debt owed to its creditors.
The Bounce Back Loan Scheme (BBLS), launched in May 2020, was designed to enable small businesses to access finance more quickly during the coronavirus outbreak.
It provided financial support of up to £50,000 to businesses that were losing revenue and seeing their cash flow disrupted as a result of the pandemic.
A lender could provide a six-year term loan from £2,000 up to 25% of a business’ turnover, and the scheme gave the lender a 100% government-backed guarantee against the outstanding balance of the facility (both capital and interest).
A survey published in May 2021 showed that around 22 per cent of the 1.5 million UK companies which took out a loan aimed to pay it back in full within the next 12 months while 15 per cent said they would take the maximum 10 years to repay - and around one in 100 admitted they simply did not ever expect to pay back the loans.
Only £20.45bn of the total of £77bn of loans given to businesses during the pandemic had been paid back up to the end of February this year, with the latest fraud related figure up by another £200m
The latest Department for Business quarterly Covid-19 loan performance figures showed that 5.53% of legitimate bounce back loans were in arrears, while 1.08% have defaulted.
In the previous quarter a total of £1.84bn of the total loan book has been flagged for suspected fraud, up from £1.65bn from the previous review.
However, it is estimated this could rise to almost £20bn, but it is not all negative, as the government claimed that up to 500,000 businesses and 2.9m jobs were saved through these loan schemes.
Lenders had flagged £1.1bn as suspected fraud by December 31 2023, but this was subject to change as internal processes were completed.