Covid: Scunthorpe student claimed £50k loan for non-existent business

Kurt John Barkhuizen racked up debts in excess of £30,000 on top of his Covid rescue loan

A student has been declared bankrupt after he took out a £50,000 Covid aid loan from the government for a business he never had.

Kurt John Barkhuizen, 28, from Scunthorpe, was not running a business at the time he applied for and received the Bounce Back Loan in June 2020.

The Insolvency Service said he told investigators he had intended to start a second-hand car dealership.

He racked up debts in excess of £30,000 on top of the Covid loan.

Mr Barkhuizen petitioned for bankruptcy in April 2021 after he used 60% of the loan to buy and insure a car, which he then sold for £10,000.

He also spent more than £8,000 on services for his would-be business, including premises, a van and tools, as well as living expenses and an extra £4,300 in payments to creditors, the service said.

• More stories from Yorkshire and Lincolnshire

When quizzed by investigators, Mr Barkhuizen claimed he planned to sell his home to clear his debts and start a business buying and selling cars using his car mechanic skills.

He said he clearly told the lender his business was not yet trading when he applied for the loan.

The student also said he had not been able to proceed with his business plans because the pandemic had forced car auctions to be cancelled during lockdowns and the sale of his house had fallen through.

Following the Insolvency Service investigation, the Secretary of State for Business, Energy and Industrial Strategy accepted the bankruptcy restrictions, which means he cannot run a company without a court's permission for nine years or borrow more than £500 without disclosing his bankrupt status during the same period.

Restrictions usually last for 12 months, but the official receiver extended Mr Barkhuizen's sanction to nine years due to the risk he posed to future lenders because of "the abuse of the Bounce Back Loan", the service said.

Fiona Newman, deputy official receiver at the Insolvency Service, said: "Kurt Barkhuizen took out a Bounce Back Loan but failed to ensure this was used for business purposes as the terms of the loan set out.

"He also had considerable debts at the time and has failed to return any money to creditors."

The Bounce Back Loan Scheme, which ended on 31 March 2021, was aimed at helping small and medium-sized businesses through the pandemic and allowed them to borrow between £2,000 and up to 25% of their turnover. The maximum loan available was £50,000.