A second Labour MP, Perran Moon, has been suspended over Covid loan repayments, after voluntarily referring himself for investigation.
Moon, the MP for Camborne and Redruth, is listed on Companies House as the co-director of a training company called Autoswot, external, which last filed accounts in June 2021.
Government Bounce Back Loans of up to £50,000 were made available to support small businesses during the pandemic, but a government report found the scheme was vulnerable to fraud and error.
In August, Labour MP Bayo Alaba was suspended after queries about a Covid-era loan, and a third MP, James McMurdock, quit Reform in 2025 after questions about eligibility for loans he received.
Bounce back loans worth a total of £46bn were issued when the scheme was launched in May 2020, making it the biggest of the government's pandemic-era loan schemes.
Each one had a 100% government guarantee, meaning taxpayers' cash was used to pay back banks if the companies failed, but the Covid counter-fraud commissioner later found total fraud and error estimated at up to £2.8bn to the public purse.
Autoswot had been set up in June 2019, a year before the loans became available, and at that time had forecast revenues of more than £200,000.
Moon stressed he had applied for the maximum loan of £50,000 within the rules, regularly seeking professional advice about its obligations, and would provide documents to the Labour Party investigation into the matter.
He said the loan was used to pay for "staffing and other essential business costs" during the pandemic and partial repayments were made until the company ceased trading in late 2022.
The BBC understands that Moon was repeatedly assured in writing by Companies House that no accounts needed to be filed after the company applied to be struck off, but that guidance was incorrect.
Moon, who was first elected in the 2024 Labour landslide following a career in communications and marketing, said the business folded due to unforeseen external market pressures and "despite the best efforts of staff".
He said: "In order for these matters to be looked into, I have voluntarily referred myself to the Labour Party's investigations process and will cooperate fully with this process.
"The loan application was made in good faith, and the information provided, including the company's turnover forecast, was accurate and properly based.
"I will continue to work hard every day representing my constituents while this party process is ongoing."
A Labour Party spokesperson confirmed Moon had referred himself for investigation.
"The Labour Party expects the highest standards from our elected representatives and we have robust processes in place to ensure those high standards are upheld," they said.
"We cannot comment further while the investigation is ongoing."
This is the second investigation the Labour Party has launched into the loans, with Alaba, the MP for Southend East and Rochford, also referring himself for investigation over loans made to a real estate company, Alaba Properties.
At the time, Alaba said: "There has been no attempt to avoid my financial obligations, and I am wholeheartedly committed to ensuring that the liability is met in full."
McMurdock, who now sits as an independent, was the first MP to be questioned over bounce back loans given to two fitness companies worth £70,000.
In 2025 McMurdock said all his business dealings had been compliant with the rules, adding that after taking "specialist legal advice" he had decided "to continue my parliamentary career as an independent MP".