Chancellor Rishi Sunak has announced the launch of a new \u2018bounce back\u2019 emergency loan scheme for small businesses, which will offer 100% guarantees on emergency loans.\r\n\r\nToday (27 April) Sunak told the House of Commons that the scheme would begin next week, offering SMEs loans of up to \u00a350,000.\r\n\r\nThe government will pay interest on the loans, that are worth 25% of the businesses\u2019 turnover, in the first 12 months.\u00a0\r\n\r\nHe said: \u201cAround half a million employers have already applied for help to pay the wages of over four million furloughed jobs. I know that some small businesses are still struggling to access credit.\u00a0\r\n\r\n\u201cThey are in many ways the most exposed businesses to the impact of the coronavirus and often find it harder to access credit in the first place.\u201d\r\n\r\nIt comes after he last week stated that there would be no change to the 80% government guarantee for the Coronavirus Business Interruption Loan Scheme (CBILS).\r\n\r\nRather than modify the existing CBILS, the chancellor has now introduced the new measure in an effort to offer further support to SMEs amid the ongoing pandemic.\u00a0\r\n\r\nBefore the announcement of the scheme, there was allegedly debate amongst Treasury members whether the maximum size of the new loan should be \u00a325,000 or \u00a350,000.\u00a0\r\n\r\nGreg Taylor, a partner at MHA MacIntyre Hudson, argued that SMEs are in need of grants rather than loans, however. He said: \u201cThe chancellors\u2019 new plan is unlikely to help SMEs. The kind of micro-businesses being targeted need grants, not to be saddled with more debt that they can\u2019t afford, and that will potentially stagnate their growth.\u00a0\r\n\r\n\u201cIn addition, if the criteria for the loans is the same as for the current Coronavirus Business Interruption Loan Scheme (CBILS), then many micro-businesses still won\u2019t qualify for funding.\u201d\r\n\r\nHe added: \u201cRelaxing some of the lending terms for government-backed loans to smaller businesses would be a better option than a 100% government backed guarantee. This should be coupled with a more uniform set of criteria, so SMEs aren\u2019t faced with such a lottery on how \u201ctheir bank\u201d interprets the rules compared to a competitor bank.\u201d\r\n\r\nHe further argued that loans should be repayable over 10 years, rather than a maximum six, in order to give UK SMEs a \u201cbetter chance of recovering at their own pace\u201d and repaying their loans.