THE Obama administration is setting aside US$30 billion from the financial bailout fund for a program designed to encourage lending to small businesses to aid economic recovery in the United States.

An internal document spells out how the Treasury Department plans to spend money from the fund before it expires in October 2010. The document shows US$40 billion would go to consumer and business lending programs.

Of that amount, US$30 billion would support lending to small companies, said a Treasury official last Friday who wished to remain anonymous.

President Barack Obama said in October that the administration would create an expanded business lending program but officials have had trouble finalizing the details.

Another Treasury official, who also spoke on condition of anonymity, said a range of options were still being considered and key members of Congress were being consulted. He said final decisions were expected next year.

The internal briefing paper showed the administration is projecting it will commit an additional US$21 billion to mortgage relief efforts. That's on top of US$29 billion already committed, bringing that program up to the US$50 billion the administration has projected.

But a watchdog report earlier has estimated the amount spent so far at just US$2.3 million. It also estimated that only 4 percent of the borrowers who have signed up have been helped.

Critics have said it's highly unlikely the administration will meet its goal of helping up to 4 million borrowers with modified loans. Of the 760,000 who have signed up for the program since it launched in March, just over 31,000 homeowners have received permanent loan modifications.

The internal Treasury document projected that in all, an additional US$68 billion would be committed before the US$700 billion bailout fund, known as the Troubled Asset Relief Program, expires on October 3, 2010.

The program was authorized by Congress in October 2008 at the height of the financial crisis as the government scrambled to shore up the banking system.

Over the past year, the financial system has stabilized with the help of billions injected into banks to bolster their capital. But critics say TARP has failed to achieve its main goal: to get banks to lend more to consumers and small businesses.