The Government has warned the banks it would be "completely unacceptable" if they denied funds to good businesses struggling because of the coronavirus epidemic.
Business Secretary Alok Sharma said the banks should be supporting companies through the crisis in the same way as they were propped up by the taxpayer in the 2008 global financial crash.
His intervention followed a warning that nearly a million small firms could run out of cash within the next four weeks as they struggle to access the Government's widely criticised emergency coronavirus loans support.
A report by The Corporate Finance Network of accountants predicts that almost a fifth – 18% – of Britain's five million small businesses will not be able to survive the next month despite the taxpayer-backed loan scheme.
This could see nearly four million staff lose their jobs in May, it cautioned, adding that as many as 42% of small firms could go bust if the lockdown lasts for four months or more.
Speaking at the daily No 10 press conference, Mr Sharma acknowledged the scheme would "not be perfect from the outset" and confirmed Chancellor Rishi Sunak would be making changes in the coming days.
At the same time, he said that Mr Sunak, the Bank of England Governor and Financial Conduct Authority had made clear to the banks that the benefits of the loan scheme were "passed through to businesses and consumers".
"It would be completely unacceptable if any banks were unfairly refusing funds to good businesses in financial difficulty," he said.
"Just as the taxpayer stepped in to help the banks back in 2008, we will work with the banks to do everything they can to repay that favour and support the businesses and people of the United Kingdom in their time of need."
Earlier, the Treasury insisted that "hundreds" of loans had already been issued through the scheme which came into operation last week.
"Obviously different banks work in different ways, but cash has very much gone out of the door," a spokesman said.
However, lenders have come under heavy fire amid claims of unfair lending tactics, with some demanding personal guarantees from business owners and others seeking to apply high interest rates once the interest rate-free initial period ends.
Swathes of small firms have been complaining the scheme is hard to access and that it is not a level playing field, with banks being given too much leeway.
The coronavirus loans scheme is designed to offer companies up to £5 million interest free for the first year to help shore up their businesses.
The Government has pledged to underwrite 80% of the risk of the bank loans as an incentive for banks to lend to firms in difficulty.
But it came to light last week that many big lenders were demanding business owners give personal guarantees that could see their assets being seized, while others are said to be pushing their own financial products before the emergency loans.
Federation of Small Businesses chairman Mike Cherry said the Treasury needed to ensure lenders were "pulling out all the stops" to make emergency finance available to firms that needed it.
"We can't have a situation where banks are approached by successful small firms and lenders offer up business as usual products," he said.
"This is not business as usual. Millions of fantastic small firms are facing collapse."
Kirsty McGregor, founder of The Corporate Finance Network, said: "To save a significant percentage of the UK's economy and keep almost four million people in jobs, we need to encourage and facilitate 250,000 deals within the next few weeks."