Thousands of small firms and sole traders will be eligible for the loans to help them make it through the coronavirus outbreak.
A 100% guarantee will be provided to lenders, and the government will cover the cost of any fees and interest for the borrower in the first 12 months.
There will also be a flat rate of 2.5% interest to be charged on these loans.
Stephen Jones, CEO at UK Finance, said that accredited lenders that were approved to offer Bounce Back Loans have worked at pace with the Treasury to get the scheme working.
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“…Staff are now focused on processing applications and getting money to businesses as quickly as possible,” he said.
Businesses which have already taken out a Coronavirus Business Interruption Loan (CBILS), of £50,000 or less, can apply to have these switched over to the new scheme.
Rishi Sunak, chancellor of the exchequer, commented: “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 at the Federation of Small Businesses, added: “We know many small firms have struggled to secure small loans speedily.
“We are pleased that 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.”