Business Secretary Vince Cable announced that £55 million of funding will be put forward from the Treasury's coffers, with an additional £55 million coming from the private sector.
Small firms will then be able to bid for financial help in the coming years through the scheme, joining several others that have already been successful. These include Funding Circle, a peer-to-peer lending firm.
Dr Cable said that the funding is designed to tackle long-standing structural gaps in the supply of finance to smaller firms.
"Small and medium-sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market," he explained.
Meanwhile, research published by Manpower UK earlier this week revealed that more firms are looking to recruit in the first quarter of next year.
Posted by Thomas Fletcher