Small firms are to be eligible for new Bounce Back loans backed 100 per cent by the Government.

Chancellor Rishi Sunak announced the latest addition to the coronavirus help package for businesses to the House of Commons.

The scheme will start next week with firms offered loans of up to £50,000.

Mr Sunak said: "We've been in close talks with the banks in recent days and these loans will be available from 9am next Monday.

"There will be no forward-looking tests of business viability; no complex eligibility criteria; just a simple, quick, standard form for businesses to fill in.

"For most firms, loans should arrive within 24 hours of approval."

He continued: "And I have decided, for this specific scheme, that the government will support lending by guaranteeing 100 per cent of the loan.

"We shouldn't ask taxpayers to bear all the risk of lending almost unlimited sums to businesses who may have very little prospect of paying those loans back - and not necessarily because of coronavirus.

So I don't think it's right to provide 100 per cent guarantees on all our schemes.

"The new Bounce Back Loans carefully target that extraordinary level of state support at those who need it most.

"And the £50,000 cap balances the risk to the taxpayer with the need to support our smallest businesses."

The move is being made after criticism about slow access to existing loans with banks coming under fire for delays in handing out loans.

Both the CBI and Federation of Small Businesses called for the introduction of the scheme for smaller companies with total Government backing.

CBI director general Carolyn Fairbairn said firms could be forced out of existence without further help.

And Mike Cherry, chairman of the Federation of Small Businesses, said: "The average value of a CBILS loan stands at more than £170,000. The vast majority of small firms - more than 95 per cent of which are micro businesses or sole traders - are not seeking loans of anywhere near that size."

The scheme requires a two-page self-certification form online with no capital or interest repayments due for one year.

In his statement to MPs about the economic climate, the Chancellor said: "We should be in no doubt about the seriousness of the situation.

"More than 1.5million new claims have been made to Universal Credit, over 4million jobs have now been furloughed and survey evidence suggests a quarter of businesses have stopped trading.

"These are already tough times and there will be more to come.

"And while our interventions have saved millions of jobs and businesses, we can't save every job and every business."

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