The first phase of the government's new British Business Bank has been announced, with a pledge to provide £300m of support to SMEs in the first round of investments.

Business secretary Vince Cable said the move 'shows we are serious about increasing competition and diversity in the business lending market.'

The bank, first announced last September, has been allocated £1bn of government money and will become formally operational next year.

Cable said the government was determined to make support available as soon as possible, and were targeting SMEs as research by the National Institute of Economic and Social Research (NIESR) showed they had been disproportionally affected by difficulties in gaining funding following the financial crisis.

It is expected the first deal will be reached this autumn, with businesses encouraged to submit expressions of interest for investment by 22 May to be part of the first round.

Cable said: 'Small and medium-sized businesses are still telling me that access to finance is their number one problem, preventing them from investing and growing. Establishing a lasting business bank institution is a long-term project, but getting this money reaching SMEs as soon as possible is the first step.'

The bank will be able to back companies by both making loans and investing in an individual firm's equity or debt. Public money will make up no more than 50% of the total investment, the Department for Business, Innovation and Skills said, with private sector investors being sought to match the available state funding.

Get the latest news in your inbox. Sign up to receive the Accountancy Live e- newsletter, HERE