Published: 10:11, 04 May 2020
| Updated: 10:13, 04 May 2020
The Bounce Back Loan scheme will allow firms to borrow between £2,000 and £50,000 - with the government guaranteeing 100% of the loan.
In addition, there will be no fees or interest to pay for the first 12 months.
It comes as a bolt-on to the previously announced Coronavirus Business Interruption Loan Scheme (CBILS).
Loan terms will be up to six years, with interest at 2.5% after the payment-free first 12 months.
It is hoped approvals and the release of funds will be swifter than the CBILS which has come in for criticism for delays by lenders in rubber stamping funding for firms facing financial difficulties.
Firms and sole traders can apply for a loan if your business has been negativity affected by the pandemic and was not an 'undertaking in difficulty' on December 31, 2019.
Those already claiming under the CBILS are not eligible to apply.
However, the government says those who have already received a loan of up to £50,000 under CBILS will be able to transfer it into the Bounce Back Loan scheme until November 4.
In addition, a discretionary fund was announced on Saturday to accommodate certain small businesses previously outside the scope of the business grant funds scheme.
Business Secretary Alok Sharma and Minister for Regional Growth and Local Government, Simon Clarke said up to £617million would be made available.
This is an additional 5% uplift to the £12.33bn funding previously announced for the Small Business Grants Fund (SBGF) and the Retail, Hospitality and Leisure Grants Fund (RHLGF).
The additional fund is aimed at small businesses with ongoing fixed property-related costs and will be administered by local authorities.
They are expected to be informed of how much each will be allocated this week.
Whitehall chiefs say they are urging local authorities to prioritise businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates. But add local authorities may choose to make payments to other businesses based on local economic need. The allocation of funding will be at the discretion of local authorities.
Businesses must be small, under 50 employees, and they must also be able to demonstrate that they have seen a significant drop of income due to restriction measures.
There will be three levels of grant payments. The maximum will be £25,000. There will also be grants of £10,000. Authorities will have discretion to make payments of any amount under £10,000.
"Many of the companies that have been unable to use existing support schemes are already on borrowed time." - Dr Adam Marshall, BCC
British Chambers of Commerce director general Dr Adam Marshall said: “We have been calling for additional support for businesses and entrepreneurs who have fallen between the cracks, so it is welcome to see additional funding allocated to support some of these hard-pressed firms.
“Clarity and speed are of the essence. Many of the companies that have been unable to use existing support schemes are already on borrowed time – and will need these grants paid out swiftly if they are to survive.”