The UK Treasury has confirmed that it was considering offering 100 per cent guarantees on loans up to 25,000 pounds for small firms, it was reported on Friday.
Chancellor Rishi Sunak said in March that UK-based small and medium-sized business could apply for interest-free loans to help them with COVID-19 related difficulties, reports the BBC.
However, companies have said that they were still finding it difficult to get credit.
Bank of England governor Andrew Bailey has questioned whether the system is “too complicated”.
As many as one million of the UK’s smallest businesses, many employing no more than a dozen workers, could benefit from the new rules, analysts say.
These include shops and pubs, which have been forced to close under coronavirus lockdown measures.
Loans to larger businesses under the coronavirus business interruption loans scheme (CBILS) will continue to get 80 per cent backing.
The CBILS provide loans of up to £5m for companies with a turnover of less than £45m.
However, many firms have complained that loans are coming through too slowly and that some banks have imposed tough criteria on granting credit.