Business leaders have welcomed changes to lockdown loans but say more support is needed to keep firms afloat over the coming months.

On Friday night, Rishi Sunak announced that small businesses would be given more time to repay bounce-back loans under a “pay-as-you-grow” initiative.

The chancellor said he was determined to give firms the “breathing space to get back on their feet” amid the disruption caused by the COVID-19 pandemic.

But with the furlough scheme due to wind up on 30 April, and the end of business rates relief and the VAT cut also in sight, there are fears of job losses and a harsh cliff edge for some sectors.

Industry group UK Hospitality says “pay-as-you-grow” should be extended to all government-backed loans.

It is also calling for the VAT cut and business rates relief to be extended, alongside a “flexible furlough” allowing firms to gradually bring back workers.

The chancellor is expected to give more detail on what support will stay in place for businesses when he delivers the budget on 3 March.

More than 1.4 million small firms have so far borrowed up to £50,000 under the bounce-back loan scheme.

Repayments had been due to start in May, but under the new arrangements businesses will be able to:

• Extend the length of the loan from six to 10 years

• Make interest-only payments for six months, with the option to use this up to three times during the loan

• Pause repayments for up to six months

A recent report by the National Audit Office said up to 60% of loans made under the scheme may never be repaid.

It comes as businesses and some Conservative MPs press the prime minister to commit to removing almost all restrictions when the first phase of vaccinations is complete.

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Boris Johnson is due to set out his roadmap for easing lockdown later this month.

The government rubbished claims in the Daily Telegraph on Friday that pubs may be able to open in April if they don’t serve alcohol.

A senior source told Sky News: “We are not going to open pubs that can’t sell booze. What would be the point of that?”

On reports that takeaway hospitality could start again in time for Easter, the source said “no decisions had been made” as it was “far too early in the process”.

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