Chancellor Rishi Sunak made the announcement during the government’s second daily coronavirus address on Tuesday afternoon (17 March).

Sunak outlined a number of specific measures to support the travel, tourism and hospitality sector, which has made several urgent pleas for aid in recent days.

A new £330 billion government-backed loan scheme will be available next week, while a broader business rate “holiday” will be extended across the leisure, hospitality and retail sectors.

Sunak said the crisis was both a medical and economic emergency, the likes of which the country has not faced during peacetime.

“People are deeply worried and anxious about their livelihoods,” said Sunak. “I promise to do whatever it takes to support our economy through this crisis.

“This struggle will not be overcome by single package of measures, it will be won through a collective national effort.

“It will be underpinned by government intervention unimaginable a couple of weeks ago – this is a time to be bold and courageous.”

New scheme coming next week

Sunak said the £330 billion government-backed loan package was equivalent to 15% of GDP.

“Any business that needs access to cash will be able to access a government-backed loan or credit on attractive terms,” said the chancellor.

Larger firms will have access to new lending facilities the government has agreed with the Bank of England, said Sunak.

SMEs and medium-sized businesses, meanwhile, will now be able to access up to £5 million from the Business Interruption Loan Scheme, up from the £1.2 million outlined in last week’s Budget.

No interest will be payable during the first six months, Sunak confirmed. The scheme will be “up and running next week”, he added.

Sunak said some sectors, such as aviation, faced particular difficulties, and confirmed he had discussed with the transport secretary specific support for airlines and airports – a “transport support package”.

However, Sunak did not offer any further details of what this package would contain. It comes after airlines hit out at the lack of support in last week’s Budget for the aviation sector, as well as an increase in Air Passenger Duty in line with inflation.

The chancellor said as well as access to finance, businesses would need assistance with cash flow – and said he recognised the significant challenges faced by the leisure, hospitality and retail sectors.

He said those businesses that do have an insurance policy covering the effects of a pandemic, the government would ensure those they are able to make a claim against their policy.

For those businesses without insurance, Sunak said they would each be able to access an additional £25,000 bridging grant to support them.

The so-called business rates “holiday”, meanwhile, will be extended to all businesses in the leisure, hospitality and retail sector, regardless of their rateable value. Firms with a rateable value of less than £51,000 were last week offered a year’s relief from business rate payments.

The government previously outlined capacity for cash grants of up to £3,000 for about 700,000 qualifying small businesses. Sunak said these grants would be increased to £10,000.

Together, Sunak said these new measures were worth more than £20 billion in tax breaks and other support.

Employment support

Sunak said the two main fixed costs SMEs would have to handle during the coronavirus pandemic would be rent payments and staffing. He said he wanted to “provide security to business” with a range of employment support.

“We’re trying to find a way for businesses to meet their fixed costs of staff without letting them go,” said the chancellor.

“Business owners will be able to walk into their local bank branch next week and talk to them about the coronavirus business interruption loan.”

Sunak described the support as “a comprehensive, calculated and coherent response” adding: “We have never faced an economic fight like this one.”

Other measures include a three-month mortgage holiday, and a pledge to work with trade unions and other business associations to “support people’s financial security”.