U.S. Sen. Mark Warner is pushing a proposal to use $1.5 billion to $2 billion in federal dollars to more quickly leverage $20 billion to $30 billion in bank loans for struggling small businesses.

Warner's plan, which is included in legislation that passed the House on Thursday and is expected to be introduced soon in the Senate, is aimed at helping small businesses that are not failing but need reasonable lines of credit to survive.

"The problem is, these small businesses have been hung out to dry" because of the drop in the value of real estate that had provided loan collateral in the past, along with the overall drop in sales, Warner said Thursday.

The recession has already weeded out many weak enterprises, but the proposal is intended to avoid "cutting into the bone" of the economy, the Virginia Democrat said. "Sixty-five percent of the jobs are created by small business. We're making it even harder to get a robust recovery."

Warner's proposal, which the senator is outlining today in Richmond at a meeting with small-business owners and bankers, involves funneling federal money through existing state programs, such as the Virginia Capital Access Program, to give banks slightly more security when lending to businesses that fall just short of credit requirements.

It works like this: A business owner would pay an extra 1 or 2 percent of the money borrowed into a special reserve fund at a bank. The federal government would pay a matching amount into the same fund. The bank could pool together all the fees paid by all the borrowers and the feds under this program. If one of the loans failed, the bank could use the funds to help recoup its loss.

Warner's staff estimates that the infusion of up to $2 billion in matching funds could lead to up to $30 billion in new business loans nationwide. The program would be available to qualified businesses with no more than 500 employees, and a loan could not exceed $5 million.

Scott Parsons, director of Virginia's access program, stressed that it's only for businesses that have good track records.

"They're not going to make a bad deal good. This is for the almost bankable deal," Parsons said. Virginia's program provides similar support with state funds but requires banks to pay more money upfront.

Don Peterson, owner of All About Bikes in Chesapeake, thinks his is the type of business that could be helped. He opened the bicycle shop in 2000 and was doing well until the recession hit two years ago.

Since then he has closed a second store but still operates his original enterprise off Battlefield Boulevard. With the slow economy, he's had trouble arranging affordable bank credit to get him through the slower cold-weather months.

"We're keeping our bills paid and all that," Peterson said. "It's tenuous.... I didn't lose sleep over money. I do now."

Bruce Whitehurst, head of the Virginia Bankers Association, said Warner's approach has support among many lenders, in part because it can aid qualified small businesses more quickly than other programs in a $30 billion House bill passed this week.

Warner said he hopes lawmakers approve the small-business assistance before they leave for a five-week recess beginning in early August.

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Senator Warner hosted a roundtable discussion with small business owners and bankers on Friday at Richmond's Consolidated Bank & Trust to discuss his specific ideas to help small businesses get access to credit.