FAB RICATO R VI EW
Are you funding your Ferrari
with a bounce back loan?
Danny Williams, MD of Pioneer Trading, discusses bounce back loans, the abuse
of furlough and the current boom in the housing market.
With Twitter and our industry’s
business magazines dominated
in recent months by the recent
phoenixing of window and door
industry businesses, I see little in those same
channels about a far wider practice that, whilst
also essentially legal in its premise, will have a
damaging long term effect on our country: the
misuse of bounce back loans. And whilst there
are no suggestions as yet of companies from our
sector participating in such practices, I am certain
that we are not immune.
The government scheme, which offers loans of
between £, up to £, per company
with repayment holidays of up to a year followed
by interest charged at .% per annum for the
remaining period of the six year loan, is reported
as being – surprise surprise – widely abused.
Stories are abounding in the wider press,
of how the loans are being used to boost
deposits on motors and all sorts of luxury
goods. Cynical business owners are also using
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dormant companies to make multiple claims with
which they are funding the outright purchases
of Ferraris and other luxury cars, a practice
that, according to one major motor dealer,
is widespread. Reports have also emerged
about criminal gangs jumping on this particular
gravy train, recruiting ‘clean’ directors to apply
for loans. Despite clear criteria required for
applications, including accounts, these people
appear to be getting away with it.
On a humbler level – though still cynical – and
within our industry, there’s a certain amount
of willy waving taking place on certain installer
forums, about taking the money and rolling
the firm when the loan is called in, whether the
money is needed or not. Others are boasting
about taking the cash even whilst business is
booming, and blowing it on tools and other
goodies.
The true extent of the scams will not be fully
possible until loan repayments become due from
next April, when the fear is that there will be a
flood of bogus claims revealed in the months
following. Estimates are that the sum will be in
the billions, another knife in the heart of our
recovering economy.
NOW ADD FURLOUGH INTO THE MIX
Whilst on the subject of Covid-related
government support, the furlough scheme
is another instrument for potential abuse.
Furlough is, of course, designed to stave off mass
redundancies and, actually, I believe that it is
another of this government’s generally laudable
efforts to support the country during these weird
and wonderful times. But of course, furlough is
being abused by many companies taking the cash
when they know that they will cut their numbers
anyway.
So, praise should go to companies and
individuals that do the right thing, including
Darren Waters, CEO of hardware group, ERA.
Towards the end of August, Darren announced
that whilst his firm was making 8% of his
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