Under the scheme governing bodies will be able to take out interest-free loans of up to two per cent of their total school budgets, repayable within two years.

The authority is believed to be the first to have taken such a step to prevent schools setting deficit budgets.

So far around 20, mainly primary, schools have expressed an interest in the loans, but it is anticipated many more will come forward once the county’s financial position becomes clearer in June. There are about 300 primary and secondary schools in the county.

Schools wanting to participate in the scheme will have to show they have the means to repay the money.

Loans of between Pounds 2,000 and Pounds 50,000 could be approved by the end of the term.

Mike Pollard, Somerset’s local management of schools formula manager, said the move had been approved by the education committee as a way of helping schools overcome short-term problems.

He said: “We anticipate this loan system will help those schools who will be able to make repayments more easily due to income from increased pupil numbers.

“It is not something which will help small, rural schools and they are not likely to wish to overburden themselves with debts.

“Although we are not the only authority to be attempting to help its schools facing financial hardship, we believe we are the first to have packaged it in this way.”