A scheme to boost the supply of bank lending to small companies will be launched next week, the finance ministry said on Wednesday, after the European Commission approved the plan.

Chancellor George Osborne unveiled the National Loans Guarantee Scheme last November under which the government will guarantee 20 billion pounds of bank lending to lower the cost of borrowing for small businesses.

Now that state aid approval has been granted, we are on track to launch the scheme early next week, a Treasury spokesman said.

The scheme is expected to start before Osborne presents his annual budget on March 21.

(Reporting by Fiona Shaikh; Editing by Louise Ireland)