Senate passes small-business credit bill

WASHINGTON - The Senate passed long-delayed legislation Thursday designed to open up credit to small businesses and award them with other incentives to expand and hire new workers.

Democrats won a 61-38 vote to pass the legislation, joined by two Republicans. The measure would establish a $30-billion government fund to help open up lending for credit-starved small businesses, give them $12 billion in tax cuts and boost Small Business Administration loan programs.

The tally gives President Barack Obama and his besieged Democratic allies in Congress a much-sought - but relatively modest - political victory with less than seven weeks to go before Election Day.

The new loan fund would be available to community banks to encourage lending to small businesses. Supporters say banks should be able to use the fund to leverage up to $300 billion in loans.

Sen. Charles Schumer (D-N.Y.) told Newsday that a version of the program that expired during the summer created 567 loans worth $188 million on Long Island, saving local businesses $5.6 million in fees. He noted that the program primarily guarantees loans that rarely default, so it will cost little to taxpayers.

The loan fund was opposed, however, by most Republicans, who liken it to the 2008 bailout of the financial system. They said it would encourage banks to make loans to borrowers who aren't good credit risks. - AP