A bank chief has written personally to a million small business customers telling them it has £5billion to lend.

Amid weak demand for business loans, António Horta-Osório, chief executive of Lloyds Banking Group, has pledged to lend £5 billion to small and medium-sized enterprises (SMEs) in 2013 under the Funding for Lending scheme.

It follows a similar letter to small businesses last year – and comes as the Group records a rise in SME net lending growth of 7% over the last two years, against a market decline of 8%.

He said: “Small and medium-sized businesses are the bedrock of the UK economy and I am determined to give them all the support they need.

"This reassurance is critical if we are to help rekindle confidence and spur economic growth and that is why I want to give my personal commitment to supporting the sector through the letter I have sent today.”

SME clients approved for a loan are given a 1% interest discount for the life of the loan, regardless of their sector. The letter makes it clear that the Group will continue to grow its lending to SMEs on a net basis throughout 2013.

It also commits to helping 100,000 start-ups get off the ground this year.