A plan by the UK’s largest banks to create a £500million funding pot to help small businesses in the UK has been slammed by a leading business organisation.

A plan by the UK’s largest banks to create a £500million funding pot to help small businesses in the UK has been slammed by a leading business organisation.

According to a report in the Guardian, the Royal Bank of Scotland, Lloyds Banking Group, Santander, Barclays, HSBC and Standard Chartered are all prepared to pay up to £100million each into the fund.

The aim is to help small businesses, such as companies trading on eBay that send goods off with international courier services, gain access to funding. 

However, Stephen Alambritis, spokesman for the Federation of Small Businesses, was not impressed by the banks’ proposals.

He said the banks should be lending billions, not millions to small firms, and described the proposal as “an insult”.

At a meeting on Wednesday with business secretary Vince Cable and chancellor George Osborne, representatives from the banks will ask the government to match their proposed contributions. This is likely to be a highly contentious issue following the last government’s bailout of a number of banks, and especially as results of the government’s own spending review are due out on October 20.