Santander UK is planning to rapidly expand small business lending after freeing up more than £2bn following its withdrawal from a deal to buy 316 branches from Royal Bank of Scotland.

Last week, Santander announced a new funding programme to help finance equipment purchases by smaller British companies, using money the bank has borrowed under the Government's Funding for Lending scheme.

Five of the UK's six biggest lenders have signed up to the Government's Funding for Lending scheme, designed to stimulate the economy by making cheaper loans available to firms and individuals.