Police are reviewing allegations of fraud and other potential offences relating to an evangelical church that claims to turn around the lives of troubled young people, but which has been accused of pressing its young members to hand over thousands in donations.

Spac Nation has previously been lauded by police for diverting young people from gang culture, but in recent days concerned parents have said it operates “like a cult”. They and former members claim it encourages congregants to take out loans to fund the church.

Two mothers said this week that their children had been pressured into handing over entire student loan funds, as well as money from personal loans and loans on businesses set up with the help of pastors.

On Wednesday, the Metropolitan police said: “We have received allegations that pertain to potential fraud and other possible offences that relate to Spac Nation. Officers are reviewing the allegations to identify if any criminal offences have potentially been committed. Once this review is complete, a decision will be made as to whether a criminal investigation is launched. We cannot comment any further at this time.”

A spokesperson for the Serious Fraud Office would neither confirm nor deny a claim that it was also looking into the church.

Spac Nation is a black majority church whose Sunday services, often held in hotels and other upmarket locations, attract hundreds of people, mostly aged under 30. Accounts lodged at the Charity Commission show it had an income of £1.17m and expenditure of £1.19m in 2018.

Young members are attracted by a designer aesthetic rooted in black music culture, with pastors pictured in designer clothes and posing on gleaming sports cars and four-by-fours. Services mix religion with dancing to performances of rap and R&B music.

The Met’s statement came after Steve Reed, the Labour MP for Croydon North, in the London borough where the church’s activities are based, met police on Monday to discuss a number of allegations made to him by constituents.

Concerns have been raised over Spac Nation’s developing links with the Conservative party in the borough, after Jayde Edwards, a pastor in the church, was selected to fight a council byelection for the party.

The Conservatives, who struggle to attract young black supporters, have seemed keen to embrace the church, with Edwards pictured sitting one place away from Boris Johnson at the Tory party conference. The lead pastor, Tobi Adegboyega, who was also at the event, has previously been pictured outside No 10 after meeting with the PM’s advisers.

A spokesman for Spac Nation said the church welcomed the police investigation and would cooperate with any inquiries.

Daniel Ogoloma said: “It is important that the Met police look into these allegations, we believe it will put things to rest. Although the Met police have not officially contacted Spac Nation, we will cooperate with any investigation that keeps young people safe.

“Our organisation has worked according to the law and we will keep respecting the law of the land. We will however not condone any illegality of any leader or individual and that’s why we welcome all investigations or enquiries.”