Small and medium-sized UK businesses will benefit from a £900m lending package from the government, George Osborne has revealed.
The Chancellor announced the move ahead of the Autumn Statement, saying: "The government's long-term economic plan is working with the Funding for Lending Scheme playing a vital role in supporting the recovery,.
"Now that credit conditions for households and large businesses have improved, it is right that we focus the scheme's firepower on small businesses, which are the lifeblood of our economy.
"That's also why we've reformed the banks, introduced the British Business Bank and are now focusing the Funding for Lending Scheme on supporting them."
The policy will see the Treasury give £400m ($625m, €505m) to expand Enterprise Capital Funds, which invest in rapidly growing SMEs.
Osborne will also give up to £500m of new bank lending to SMEs through The Funding for Lending (FLS) scheme, which will run until January 2016.
The government claimed that the FLS has contributed to a "substantial" fall in bank funding costs since its launch in mid-2012.
The incentives in the FLS were re-focused towards business lending in November 2013.
The extension announced today will continue to provide support "where it is most needed", by focusing the incentives in the scheme towards lending to SMEs in 2015.
"By providing a backstop for funding for banks, the FLS has supported access to credit across the economy during an exceptional period," said Mark Carney, governor of the Bank of England.
"As the banking system has been returned to health, the need for that backstop has been reduced.
"The scheme is not permanent so, as access to credit has returned to the mortgage market and large corporations, the scheme has been tapered appropriately.
"The extension announced today concentrates the FLS on the one area where support remains warranted: the supply of credit to SMEs."