The Chancellor has confirmed that Barclays, Lloyds Banking Group, Santander UK, Royal Bank of Scotland, and new British bank Aldermore have signed up to the government's National Loan Guarantee Scheme (NLGS), which will provide cheaper lending to businesses with a turnover of up to £50m.
Small and medium-sized businesses will from today be offered loans at a 1pc discount to the banks' standard lending rates, with about £5bn of government-guaranteed borrowing being made available in the first tranche.
Barclays and RBS are expected to be the biggest users of the scheme to issue £1.5bn each of government-backed bonds to provide the cheap loans to small businesses. Lloyds is likely to provide about £1bn of loans and Santander less than £500m.
HSBC is a notable absentee from the scheme, arguing that since it funds its corporate lending almost entirely from deposits it makes little sense for it to borrow money on the wholesale markets, even with the government guarantee, to finance its business.
"HSBC is unable to participate on commercially viable terms," said the bank in a statement.