Representatives of the Irish and German governments have formally signed off on the long awaited release of cash to fund cheap loans for small business.

The Strategic Banking Corporation of Ireland (SBCI) will have an initial €800 million to loan to small and medium-sized enterprises to support expansion and job creation.

German state bank, KFW has committed €150 million to the project under a deal betweenthe two governments, the European Investment Bank is providing €400 million with the balance coming from the Republic’s National Pension Reserve Fund.

The Minister for finance, Michael Noonan, his cabinet colleague, Brendan Howlin and German opposite number, Wolfgang Schauble, representatives of the EIB, pension reserve fund and KFW, formally signed off on the deal today.

Mr Noonan said he expected that the first loans would be made by the end of this year. “We have big plans for the SBCI and it will be a key source of funding for years to come,” he added.

“The legislatoin which established the SBCI allows for up to €5 billion to be made available to SMEs over the next five years.”