(Adds currency in headline. No change in text.)

BEIJING, Feb 25 (Reuters) - China announced a string of new measures to ease financing for small businesses, amid an epidemic which has been putting massive pressure on the world's second largest economy.

China will increase yuan re-lending and re-discount quotas by 500 billion yuan to help smaller banks increase support to small and medium-sized businesses, China's state television reported on Tuesday, citing a meeting of the country's cabinet.

Smaller companies, with less cash reserves and collateral, are suffering especially hard amid an epidemic that has killed over 2,600 and infected over 77,000 in China.

Commercial banks should work hard to "significantly" lower lending rates and increase their lending to smaller businesses, state television quoted a statement from the cabinet meeting as saying.

China's central bank has vowed to step up support for the economy.

China will also increase policy banks' loan quota by 350 billion yuan to make loans targeting private, small and medium enterprises, said the meeting

Banks are being encouraged to delay interest payments for eligible firms, such as small and medium firms and individual businesses experiencing financing difficulties, until June 30, it said. All companies in Hubei province are eligible.

Loans to small and agricultural businesses should be lowered by 0.25 percentage point, it said.

Small businesses in Hubei should be exempted from paying value-added tax from March until the end of May.

(Reporting by Gabriel Crossley, Colin Qian, Cheng Leng, Stella Qiu and Se Young Lee, editing by Larry King) ((timothy.heritage@thomsonreuters.com; +442501122; Reuters Messaging: timothy.heritage.thomsonreuters.com@reuters.net))