Hello,
I have taken an SFLG loan to start a business. Unfortunately I has been cheated by one of people I contracted to do the job in the office, who has totally disappeared with a huge chunk of money. Business can not start, and I can not keep repayments as a result. Does this fall under BERR security as a case of a default and should I pay only 25% of the loan?
Thanks for any advice!
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I doubt that you can just walk away from this on the grounds that someone you gave money to cheated you and has now disappeared. At the very least BERR and the bank ought to be extremely interested in how this came to be or they'd be wide open to fraud. It is hard not to react cynically to the suggestion that an untraceable 3rd party has gone off with the money.

I'm not saying that you're being fraudulent but BERR has a duty to protect the taxpayers money if they're potentially going to underwrite the failure of your business and the loss of the loan. As a taxpayer I'd be furious if they're not pretty searching about this. They're going to ask questions about why you gave someone money without making sure that they did the work contracted for and what steps you took to protect our investment in your business.
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yes, I understand this as I am a taxpayer as well! -and actually I am a vicitm of fraud myself now. I have reported this case to the police but they said this is not a criminal offense and should be dealt through civil court. I am still willing to repay this and just trying to find a best solution as business will not start in a near future and I will not be able to keep repayments as per contract. It is a very unfortunate situation...
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I do sympathise, and I'm sorry if my previous answer was harsher than it needed to be.

I think the key thing is to be able to persuade BERR that your payment to the defaulting supplier was reasonable and showed the same proper care that you'd have taken if the money was your own.

I also guess that you need to look at the small print in the contract with BERR pretty carefully. If I were them I'd word it such that the guarantee doesn't apply if the money is lost as a result of fraud or embezzlement, for example. Though in practice wording a contract to cover eventualities like that may be pretty hard.
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the same thing was also happened with me last year. i tried my best to sort this mess out. but could not solve this. if you have some suggestion than please don't hesitate to reply
thank you very much
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