An agreement has been signed that will make it easier for smaller businesses to get low-interest loans.

The new Strategic Banking Corporation of Ireland is getting €400m from the European Investment Bank, €240m from the Government, and €150m from the German state bank, KfW.

Loans will be available to small and medium-sized firms through Bank of Ireland and AIB from December.

It will be available on more flexible terms than currently available from commercial banks.

German Finance Minister Wolfgang Schaeuble and Werner Hoyer, the Head of the European Investment Bank, this afternoon joined Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin for a signing ceremony.

Mr Hoyer has said the purpose of the Strategic Banking Corporation is not to boost the profits of the banks, but to ease access to finance on SMEs.

Despite Ireland's growth rate, he said, it is important that an additional channel, offering attractive lending conditions, is made available to small and medium firms.

Speaking on RTÉ's News At One, he also said there needs to be trust in the agents, the Irish banks lending the money.