Six of the UK’s foremost banks are joining together in a pilot scheme aimed at easing the funding shortage for small businesses.

Under the pilot scheme, businesses that fail the bank’s lending criteria will be referred to smaller regional lenders known as community development finance institutions. The six banks are RBS, Lloyds Banking Group, Barclays, HSBC, Santander and The Co-operative Group.

John O’Sullivan, owner and chairman of peer-to-peer learning and personal development forum for staffing business owners Elite Leaders, says the scheme is potentially helpful but only for very small recruiters.  

“Most recruitment companies would be off the radar of this scheme,” says O’Sullivan, because the loans involved – between £1,000 and £50,000 – are not sufficiently large to meet their funding needs when looking to expand. 

The pilot scheme, which is set to launch in the next couple of months, is one of a number of initiatives aimed at boosting lending to SMEs. An announcement of a new small business bank, supported by business secretary Vince Cable, is expected on Tuesday.