A recent article in Car Dealer Magazine has reported that business is booming for some leading UK supercar dealers due the Bounce Back Loan.
Small firms can borrow up to £50,000 per company under the Bounce Back Loan Scheme (BBLS) with the debt 100 per cent backed by the government, no repayments for a year and 2.5 per cent interest after that.
That makes the funding far cheaper than what the dealerships are offering and it appears that some business owners are seemingly using the cash to boost the deposits for new supercars instead of using the money to help their firms “Bounce Back”.
Recent figures showed the government has so far handed out around £24bn in funding to nearly 800,000 small companies under the BBLS and it looks like some company directors think that there are no restrictions on what they can do with the cash once it is in their businesses.
Several owners of supercar dealers were interviewed and all agreed that they had seen a definite trend in some small company owners splashing out the cash and they had heard similar stories from across the motor trade with some of the comments being.
‘We absolutely have had customers who say they are using the Bounce Back Loan money to boost their deposits for supercar purchases but we have always advised them responsibly and suggested this is not the right thing to do with a government-backed loan,’ ‘These Bounce Back Loans were not for this purpose and while it is up to the company directors what they do with their money we suggest they probably shouldn’t be spending this money that way.’
One dealer even confirmed he’d sold cars to clients who had used Bounce Back Loan cash to fund part of the deals and said he believed some businessmen had even used dormant companies to raise cash at low rates to splash out.
He said: ‘We have had a few clients using spare cash from bounce back, although the ones I’ve spoken to have been clients that have larger businesses, but in their words have the odd “sleeper” companies that don’t trade much outside of their groups and have basically played the system.
An HM Treasury Spokesperson said: ‘Our Bounce Back Loan Scheme is designed to keep businesses running during this difficult time and have so far helped more than 800,000 small firms.
‘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.’