The newest government support system for businesses during the coronavirus crisis has seen a rush of applications for loans after going live today.

Small businesses are able to apply for so-called bounce back loans of up to £50,000.

Barclays said it received 200 applications in the first minute with Lloyds reporting 5,000 within three hours.

Barclays said its first bounce back loans will be awarded within 24 hours.

Announced by Chancellor Rishi Sunak last week, the scheme offers smaller amounts than the existing Coronavirus Business Interruption Loan Scheme and is 100 per cent guaranteed by the Government.

Applications for loans from £2,000 under the new scheme can be made online from today online through banks.

The application involves seven questions with the Government saying funds will be made available within days.

Firms which have already applied or been granted a business interruption loan can switch or convert the application.

The Government is covering all fees and interest for the first year during which no loan repayments are necessary.

From then all loans will be charged at a rate of 2.5 per cent and will last up to six years.

Sam Holliday, regional development manager for the Federation of Small Businesses, said: "These loans, targeted specifically at the small and micro businesses who dominate our economy, are a very welcome additional resource and we are sure they will help and support a lot of Gloucestershire SMEs at this difficult time.

"We shouldn't ignore the fact that these are loans not grants and, understandably, not everyone will want to risk taking on extra debt at this financially-strained time, but for those whose business could afford it in the future they offer extremely generous terms and could be a real lifeline to get through this crisis point."

He continued: "The fact that they are fully Government-backed, can be anything from as little as £2,000K up to £50,000 with up to six years to repay and are interest-free for 12 months should make them affordable for many businesses. 

"The interest rate after that 12 months is also only 2.5 per cent - again unheard of for virtually all commercial loans.

"We would urge all businesses who need support now to at least have a look at them and consider applying - if it's not for you then that is fine but we are sure many will feel this is a positive step forward."

Ian Mean, Gloucestershire director for Business West, expects there to be a large take-up for the new loans.

He said: "I think small businesses will flood the banks with applications for these new micro-loans now they carry a 100 percent government-backed guarantee against the outstanding facility balance - both capital and interest.

"But, as ever with these government coronavirus rescue schemes, they must be delivered quickly. 

"Some small businesses will simply not be able to survive if that does not happen."