Small and medium sized hauliers hit by the impact of the COVID-19 pandemic can apply for a government-guaranteed loan of up to £50,000 from next week.

Dubbed the Bounce Back Loan Scheme (BBLS), it will enable SMEs to borrow between £2,000 and £50,000 over a six-year period, with no fees or interest to pay for the first 12 months.

This new scheme, which has a 100% government-backed guarantee for lenders, is seen as a faster way to access money than the Coronavirus Business Interruption Loan Scheme (CBILS) which only has an 80% government guarantee.

The CBILS scheme has been criticised as being difficult and slow to access with banks carrying out credit checks for thousands of applications.

Underwriting the Bounce Back Loan Scheme removes the risk that banks will not get their money back, which should speed up the application process.

The government said it will work with lenders to ensure BBLS applications are advanced rapidly. It will also work with banks to agree a low standardised level of interest for the remaining period of the loan.

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Businesses are eligible if they are based in the UK, have been negatively affected by coronavirus and were not an ‘undertaking in difficulty’ on 31 December 2019.

Firms that are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS) cannot also claim from the BBLS pot but can transfer any CBILS loan of up to £50,000 into the Bounce Back Loan scheme via their lenders until 4 November 2020.

Announcing the new scheme Chancellor Rishi 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. Firms will be able to access these loans through a network of accredited lenders.

Mike Cherry, Federation of Small Businesses national chairman, welcomed the scheme, adding that “swift delivery is now key".

Dame Carolyn Fairbairn, CBI director-general, said: “The chancellor’s new 100% guaranteed loan scheme for small businesses is transformational.”

She added: “Thousands of businesses could be saved by this lifeline. Banks now need to continue their work in overdrive to get the loans flowing faster.”