Businesses which have taken a Government-backed coronavirus loan will be given several more years to pay them off in a bid to reduce the pressure on struggling companies.

Chancellor Rishi Sunak said that companies with a bounce back loan will be able to “pay as you grow”, giving them the right to pause repayments for up to six months.

“If we want to protect jobs this winter, the second major challenge is helping businesses with cash flow,” he said, after announcing a separate scheme to help support employees.

“Right now, businesses need every extra pound to protect jobs, rather than repaying loans and tax deferrals,” the Chancellor added.

Almost 1.3 million companies have borrowed more than £38 billion through the bounce back loan scheme since it launched on May 4, giving some a vital lifeline as business dried up during the pandemic.

These firms will now be given up to 10 years to pay off the loans of up to £50,000, an increase from the former six-year repayment terms.

It will nearly halve the monthly payments that companies must make.

Bounce back borrowers will also be given the option to pause all payments for up to six months if they are struggling, or choose to pay only the 2.5% interest on the loans.

The Chancellor also promised a Government guarantee for coronavirus business interruption loans (CBILS) will be extended to 10 years, giving businesses time to repay.

Around £15.45 billion has been lent under CBILS.

He also extended the application deadline for the bounce back loans, the CBILS and CLBILS – which is for larger businesses – until the end of November, and teased a “successor loan guarantee programme” which will come in the new year.

The bounce back loan deadline was previously November 4, CBILS applications were due by September 30, and CLBILS applications were due on or before October 20.