Small firms will be offered loans of up to £50,000 that are 100% backed by the government.
Small businesses will be able to benefit from a fast-track finance scheme providing 100% government-backed loans up to £50,000.
Chancellor Rishi Sunak (pictured) said the Bounce Back Loans scheme will help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.
The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days.
The government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
The loans will be easy to apply for through a short, standardised online application. The loan should reach businesses within days - providing immediate support to those that need it as easily as possible.
Sunak, said: "Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.
"This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses."
Business Secretary Alok Sharma added: "Our small businesses are vital in ensuring our communities thrive and will be crucial in creating jobs and securing economic growth as we recover.
"This rapid loan scheme offers additional protection so small companies across the country can get access to the finance they need immediately, as part of the unprecedented package of support we have put in place."
Stephen Jones, chief executive of UK Finance, welcomed the scheme.
He said: “Finance providers are committed to helping small and medium sized businesses through these tough times and the new Bounce Back Loans scheme (BBLS) announced by the Chancellor today will make it simpler and faster for smaller businesses to apply through an online form and get the loans they need.
“The terms of this new scheme and the changes being made by the authorities to existing lending rules to support its launch will enable lenders approved by the British Business Bank to process these loan applications based on a short, simple online application form and for lenders to assess the applications at pace without the need for forward-looking financial plans.
“The BBLS will sit alongside a broad package of support that lenders are providing SMEs including through the government’s CBIL scheme, the CLBIL scheme, as well as capital repayment holidays, extended overdrafts and asset-based finance.
“Lenders approved by the British Business Bank are now working non-stop to get the new scheme up and running from Monday. Further details will be provided for those businesses who wish to apply for a bounce back loan from the end of this week.”
The scheme will launch for applications on Monday 4 May and can be applied for here.
