Small-business-loan bill stalls

WASHINGTON — In a fresh blow to President Obama's jobs agenda, the Senate on Thursday shelved a plan to create a $30 billion loan fund for cash-strapped small businesses, delaying final passage of a top administration priority until September at the earliest.

Though Senate leaders in both parties were working toward a compromise late Thursday, Majority Leader Harry Reid, D-Nev., said the Senate would not return to the bill until next week. Even if it's approved, the bill would have to go back to the House, which is to begin its August break Friday.

The loan fund would be for community banks with less than $10 billion in assets to help them increase lending to small businesses. The bill would combine the fund with about $12 billion in tax breaks for small businesses.

Democrats say banks should be able to use the lending fund to leverage up to $300 billion in loans, helping to loosen credit markets. Some Republicans, however, likened it to the financial-industry bailout.

The bill, which also includes aid for state lending programs, has won the support of more than 100 business groups, including such Republican allies as the U.S. Chamber of Commerce and the National Federation of Independent Business.

Senate Minority Leader Mitch McConnell, R-Ky., said many Republicans support numerous provisions, which could aid a key political constituency and help reduce a 9.5 percent jobless rate as lawmakers head into the November elections.

Nonetheless, Republicans voted to continue their filibuster.

Material from The Associated Press and Bloomberg News is included in this report.