Bailout proposed to aid still-struggling small businesses

Acknowledging that February's $787 billion stimulus package has yet to provide relief to struggling small businesses, the Obama administration is discussing using some of that money to develop a bailout program focused on small businesses, said sources familiar with the situation.

Multiple news sources report that Gene Sperling, a senior advisor to treasury secretary Timothy Geitner, has proposed making working capital loans available to small businesses at lower rates and with fewer restrictions, to help them pay off short term debts and buy inventory.

National Economic Council Chairman Lawrence Summers is said to oppose the proposal, saying it would expose the government and tax payers to too much risk, the Wall Street Journal reported.

The stimulus money would go toward the Small Business Administration's 7(a) loan program, which has already raised some concerns about its effectiveness - many small business owners are reporting that the loans, under the America's Recovery Capital loan program, are difficult to come by as many banks are hesitant to lend.

The proposed initiative follows concerns that the stimulus program - of which only $100 billion has been spent - is not doing enough for small businesses, which make up 60 to 80 percent of the nation's workers, according to the Washington Post.

Small business owners in immediate need of a business line of credit may want to consider nontraditional lenders, as any decisions on the proposal are said to be far off.