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In May, the UK Ministry of Finance launched the Bounce Back financial assistance scheme, which provides loans of up to \u00a3 50,000 to SMEs affected by the COVID-19 pandemic. As of this July, more than 1 million loans have been approved with a value of nearly \u00a3 31 billion as reported by <\/span>thisismoney.co.uk<\/span><\/i>.<\/span><\/p>\n Banks that have been appointed as distributors of the assistance are assigned to conduct a minimum check on prospective borrowers to speed up the process. The British government has also promised to cover the losses of these banks with a 100% guarantee if the borrowers experience default.<\/span><\/p>\n However, this financial assistance was misused by SMEs. Many SME leaders took the money from the company for themselves and put it in fixed assets to make it difficult to recover. For example, there are cases of SME leaders who used their company loans to buy a Ferrari. Not only that, there are also SME leaders who use loans to invest in premium bonds, put deposits into the property, and gamble.<\/span><\/p>\n SME leaders do these things because there is a 100% government guarantee for compensation, so they are free to use the loan as they wish without being overshadowed by losses. In fact, the government still has the power to hold SME leaders accountable if they are found to be dealing with transactions that are lower than what was allocated for their SME\u2019s welfare.<\/span><\/p>\n If the scheme continues, the British government would face an economic crisis similar to what happened a dozen years ago. There are tons of lending and financial assistance cases that ends in losses because the borrower is unable to pay the loans<\/span><\/p>\n From this case, conducting thorough due diligence is an important lesson that should be learned by financial institutions. Due diligence allows financial institutions to find out the borrower\u2019s profiles and to track their records.\u00a0<\/span><\/p>\n Integrity Indonesia, as a trusted and experienced partner, provides due diligence<\/a><\/strong> services to check the background of a business or person in the form of reputation and track record checks before the signing a contract, the appointment of a vendor or when a client evaluates a target company or its assets for an acquisition.<\/span><\/p>\n Due diligence contributes to making the right decision by increasing the amount and quality of information available. Our consultants provide different methodologies for verification and facts finding that are tailored to the client’s needs. Contact us<\/a><\/strong> to find out more about due diligence.<\/span><\/p>\n <\/p>\n <\/p>\n <\/p>\n