Lloyds TSB has said it will pass on in full any further reduction in base rates in 2008 and 2009 to small businesses.

It will also aim to ease pressure and provide certainty on overdrafts and loans by maintaining overdraft limits and overdraft margins at existing levels.

The plan will affect the bank's 600,000 SME customers that have a turnover of up to £1m.

Managing director of Lloyds TSB Commercial John Maltby said the charter would inject much needed business confidence.

He said: "As the economic environment becomes even more challenging, we're committed to continuing to support our customers by doing everything possible to ease the pressure small firms are now under.

"The measures in our new charter take our existing approach a step further and mean that businesses that bank with Lloyds TSB have the best possible support for the challenges to come."

Under the Bank of Scotland package, the bank has finalised negotiations with the European Investment Bank (EIB) to secure £250m in funding to support SME customers.

The funding will mean the bank can provide lending facilities to its customers at a significant discount to standard rates.

In edition to EIB funding, Bank of Scotland has also committed to a range of other measures aimed at providing reassurance to its 180,000 small business customers.

This includes a guarantee pricing on Bank of Scotland small business customer overdrafts for 12 months from the date of arrangement for new loans and renewals.

Adrian Grace, managing director of Bank of Scotland Commercial, said: "We are confident that these measures will make a real difference to our small business customers."

EIB funding will be available to new and existing customers with less than 250 staff.