The FLS, which was announced on 13 July by the Treasury and Bank of England, hopes to increase lending to UK households and small businesses.
Participating firms will be able to borrow up to five per cent of their stock of existing lending to the real economy. For every pound of additional real economy lending by an institution, an additional pound of access to the scheme will be permitted for that institution.
Those firms which lend more money will be able to borrow more from the scheme and at a lower cost than those firms which scale back their lending.
The scheme is likely to mean the end for the National Loan Guarantee Scheme which was launched in March to provide Government guarantees on unsecured borrowing by banks.

The reason given by the Treasury was that it was "less economical for banks to raise unsecured funding".
The NLGS will still be available but banks currently offering NLGS loans are likely to work through the FLS instead.
Chancellor George Osborne said: "The NLGS has made a real difference, with over 16,000 cheaper loans worth over £2.5bn already offered to businesses across the UK. In many cases, the money saved has meant an extra person employed who otherwise might still be looking for work.
"The more generous FLS has officially opened for business and will in time effectively take over from the NLGS delivering credit easing to the whole economy."