The Finance Minister says the launch of a new 400 million euro fund to provide low-cost credit to small businesses is a 'red letter day' for the economy.

The Strategic Banking Corporation will begin offering the credit in two-to-ten year loans at AIB and Bank of Ireland from next month.

SBCI Chief Executive Nick Ashmore says he believes 99 per cent of Irish firms will be eligible for loans - with most of the funding coming from the pension reserve fund, the European Investment Bank and GermanyÂ’s K-f-W.

Finance Minister Michael Noonan says the SBCI's launch is a milestone for recovery.