The business banking arm of Barclays has announced a new loan scheme that will offer firms a cash back payment when they take out finance to pay for environmental capital expenditure projects.

Under the scheme, which has been developed in partnership with the European Investment Bank, Barclays Commercial Bank said it will make up to £50m worth of grants available for firms with under 250 employees that take out loans to fund green projects, such as investments in low carbon technologies or more energy efficient premises.

The cash back payments will range from £600 to £51,000 and will be available for loans between £100,000 and £8.5m, with a minimum term of five years.

A spokesman for the company said that applications for the cash back offer would be assessed on a "case-by-case basis", but added that projects would have to have received planning permission, including authorisation from the environmental and nature conservation authorities.

Richard French, marketing director at Barclays Commercial Bank, said that the offer aimed to "further encourage sustainable business practices by reducing the cost of borrowing" for small and medium sized businesses.