The BFP has established a £110m fund, split 50/50 between public and private sector funding, to provide much-needed finance to UK SME's through secondary lenders, including peer-to-peer and asset finance providers.

Business secretary Vince Cable said: "Small and medium sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.

"Today’s funding announcement is just the type of help that the new Business Bank will offer. The bank, which will be operational by 2014, is being designed to tackle these long-standing, structural gaps in the supply of finance for SMEs."

The four successful bidders include peer-to-peer lenders Funding Circle and Zopa, fund management company Boost&Co and asset finance provider Credit Asset Management, which is a subsidiary of City of London Group.

Funding Circle and Zopa were awarded £20m and £10m respectively to lend directly to small businesses in the UK. Boost&Co was awarded £20m to establish a fund that will make loans between £1m and £8m to small businesses, while Credit Asset Finance was awarded £5m to provide asset finance and professional loans.

The government will announce the allocation of the remaining £45m of BFP funding in the New Year once due diligence is completed on the remaining bids that are still being considered.

Cable, who was speaking at the Association of British Insurers' Investment, also announced that a network of 1,000 business finance advisors will be launched to help small business identify the best type of finance to support their needs.