Several directors have been banned in the last month after investigations showing misuse of Covid loan money.

The Insolvency Services’ new powers were introduced last year allowing investigation and sanctioning of directors that abuse the system to escape creditors, The Financial Times reports.

After receiving bounce back loans of up to £50,000, some directors would abuse a loophole closing down companies and reopening new businesses to escape liability for their businesses’ debts.

The Insolvency Service has become the government’s main tool to crack down on the misuse of the schemes, sanctioning directors with disqualification for up to 15 years and, in the most serious cases, prosecution.

More than 160 directors disqualified between March 2021 and May 2022 have been due to allegations of fraudulent use of pandemic business support programmes.