To be spread across 11 different regions in the country, the loan amount will range between £1,000 and £250,000.
The borrowing comes with no arrangement fee and with fixed rates at 2.99% for ten years.
RBS personal and business banking CEO Les Matheson said: "Small businesses are the engine room of the UK economy, and it is essential that we do everything we can to support them.
"The launch of this additional £1bn Small Business Fund is another way that we are backing the businesses of tomorrow as they grow."
The announcement of funding comes a week after RBS and NatWest committed to invest over £1bn to improve banking experience for commercial and corporate customers by creating eight regional business accelerator hubs.
Matheson said: "We want to be the number one bank for business customers and as we work to regain the trust in our bank we want our business customers to be confident that by doing business with us, they can realise their ambitions."
Image: Nottingham entrepreneur Helen Dickson recently received funding from NatWest. Photo: courtesy of Royal Bank of Scotland.
