Businesses will be able to access 100%-taxpayer-backed loans of up to £50,000 after hospitality operators revealed more than half of applications had been turned down.
Chancellor Rishi Sunak has today launched the Bounce Back Loan scheme, which will allow businesses to apply online for loans of between £2,000 and £50,000.
Sunak has said operators will be able to access funds within days of applying and that all loans will be interest free for the first year, with no repayments due during that period.
He added: "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.
"This is in addition to business grants, tax deferrals and the job retention scheme, which are already helping to support hundreds of thousands of small businesses."
UKHospitality chief executive Kate Nicholls said: "Loans must be fast-tracked with minimal restrictions, grants must flow to all businesses that need them regardless of size, and the job retention scheme must be amended to reflect actual earnings."
UKHospitality had called for the loan scheme to be expanded after a survey found that 48% of the 378 operators polled – who manage some 21,000 sites and employ 370,000 people – had applied for loans, but the majority (57%) had failed in their application.
The rejections were due to government-imposed State Aid rules (26%), while a further 28% had been told to exhaust their own capital first.
The scheme will launch for applications on 4 May.