Financial institutions in the UK have come under repeated criticism for not lending enough money to the private sector following the recession, but the Business Finance Taskforce hope that the new fund will go some way to addressing these concerns.
John Varley, chairman of the taskforce and chief executive of Barclays, said: "As banks we have an obligation to help the UK economy return to growth.
"The private sector will play a key role in the recovery and it's our job to help viable firms to be successful."
Its plans have been cautiously welcomed by the private sector, with Matthew Fell, director of competitive markets for the Confederation of British Industry, stating that the proposals are a "welcome step".
But he warned that British banks still have a "big job" on their hands to rebuild their relationships with businesses in the UK.
By Claire Archer