Firms will be able to borrow between £2,000 and £50,000, and access the cash within days. 

The loans will be interest-free for the first 12 months, and businesses can apply online through a “short and simple online form”.

Chancellor Rishi Sunak said the new Bounce Back Loans would help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.

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.

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.”

The scheme will launch for applications on Monday 4 May, and firms will be able to access these loans through a network of accredited lenders.

The government said it would work with lenders to ensure loans delivered through the scheme are “advanced as quickly as possible”, and agree a low standardised level of interest for the remaining period of the loan.