Thousands of small firms and sole traders such as hairdressers, coffee shops and florists can borrow up to 25% of a business’ turnover (between £2,000 and £50,000 maximum) as part of the government’s Bounce Back Loans. The cash is expected to be in accounts within days.

You can apply for the Bounce Back Loan online via accredited lenders – including the five largest banks in the UK; Barclays, HSBC, Lloyds, RBS and Santander. Loans will be subject to a flat rate of interest of 2.5%.

However, the government will cover the cost of fees and interest for the borrower for the first 12 months and no payments will be due during this period to enable firms to get back on their feet. But, the borrower remains 100% liable for the debt. Loan terms will be up to six years, though early repayment is allowed and without early repayment fees.

Business owners who have already applied for the Coronavirus Business Interruption Loan of £50,000 or less can apply to have it switched over to the Bounce Back Loan. This must be done by 4 November 2020.

It’s 100% backed by the government and forms part of a £7.5bn package of support for businesses and jobs during the pandemic.

The chancellor of the exchequer, Rishi Sunak, said: “Small businesses will play a key role creating jobs and securing economic growth as we recover from the coronavirus pandemic.

“The Bounce Back Loan scheme will make sure they get the finance they need – helping them bounce back and protect jobs.”

Mike Cherry, national chair of the Federation of Small Businesses, said: “We know many small firms have struggled to secure small loans speedily. We are pleased the chancellor has listened, and swiftly developed this new scheme for small businesses to access finance quickly, interest-free for the first year and at an affordable fixed interest rate for the remainder.”