Banks are set to announce a new fund devoted to small business lending.

Each of the big name lenders - including Barclays, HSBC, Lloyds, Royal Bank of Scotland, Santander and Standard Chartered – could inject tens of millions of pounds into the scheme.

It will come as a welcome relief to the thousands of UK SMEs who complain that bank funding has all but dried up since the current crisis began, despite consistent government calls for banks to increase lending. The fund would be centrally administered, meaning that banks would effectively become investors.

Further measures are also planned to accompany the equity fund, including a small business mentoring programme to advise compani

es about their capital structure, thereby giving them a better chance of having loans approved.

More detailed and more frequent data on SME borrowing trends are also said to be part of proposals.

The British Bankers Association (BBA) confirmed that banks had been working with the government and with business groups since establishing a Taskforce on Business Lending in July. It said that findings are soon to be presented to Chancellor George Osborne and Business Secretary Vince Cable with a full re

port to follow prior to the Comprehensive Spending Review on Oct 20.

"The report will be comprehensive and will contain important and wide-ranging recommendations," said the BBA.