Obama to announce steps to aid small businesses

* Romer: Administration wants to help small business

* Small business seen as driver of job growth

* Loan guarantees to rise, fees to be cut

By David Alexander

WASHINGTON (Reuters) - President Barack Obama will announce steps Monday to make it easier for small business owners to borrow money, using $730 million in stimulus funds to cut lending fees, boost loan guarantees and expand other programs, officials said.

"We know that small businesses are the engine of growth in the economy," said Christina Romer, chair of the White House Council of Economic Advisers. "We absolutely want to do things to help them."

Romer, speaking on the CBS program "Meet the Press" Sunday, said the government would pump "a significant amount" of money into encouraging small business lending but did not give a total figure.

Lawrence Summers, head of the White House National Economic Council, told ABC's "This Week" the small businesses plan was part of the president's overall effort to "put in place a program that addresses the crucial problems and permits (economic) stability to be regained."

The Obama administration believes small businesses, which accounted for about 70 percent of new job growth over the past 10 years, will ultimately drive the recovery from the current recession, one of worst in decades, a U.S. official said.

The programs being announced Monday build on the $730 million for small businesses included in the $787 billion economic stimulus package approved by Congress last month.

"There are already a lot of things to help them in the recovery package," Romer told CBS. "Some of what will be coming out are things that were in the recovery package -- increasing the SBA (Small Business Administration) loan guarantees, lowering fees."

Obama and Treasury Secretary Timothy Geithner will announce a plan to increase federal guarantees under the SBA's most widely used loan program, an official said.

The current maximum guarantees are 85 percent of loans under $150,000 and up to 75 percent of larger loans. The guarantee will be raised to 90 percent with the aim of reducing risk and encouraging banks to make loans, the official said.

The administration also plans eliminate a number of borrower and lender fees on loans originated through its main loan program and a program to encourage long-term borrowing for major fixed assets like land and buildings.

As part of his financial stability plan in February, Geithner said the administration would boost secondary lending markets that buy up loans and would encourage small business lending by targeting markets that buy small business loans.

The SBA usually guarantees some $20 billion in loans annually but new lending is headed below $10 billion this year, a U.S. official said.

"We have talked to a lot of small business owners and one of the troubles that they are having is that community banks don't want to lend to them because of the secondary market in SBA loans has virtually disappeared," Romer said.

"So one of the things that we will be announcing is a program to get that market cleared and working again," she added. "Basically, the government will go in and step up and buy those loans if there aren't private investors to do it." (Editing by John O'Callaghan)