Senate could pass small-business bill Thursday

WASHINGTON (Reuters) - The Senate on Thursday could pass a long-stalled measure that would boost lending to small businesses, giving President Barack Obama's Democrats one of their last chances to show voters they are working to revive the sluggish economy.

The Senate is expected to hold a series of votes in the morning on the package of lending incentives and tax breaks and could possibly give it final approval.

The House of Representatives has passed a similar bill and is expected to quickly approve the Senate's version.

With the unemployment rate stuck at 9.6 percent, voters cite jobs and the economy as their top concern and say Obama has not done enough on the issue.

Republicans are poised to rack up big gains in the November 2 elections and could win control of one or both chambers of Congress.

If the measure clears Congress, it would be a rare victory on the job-creation front for Democrats, who have seen many of their other efforts blocked by Republicans this year.

Republicans have characterized the bill as a bailout along the lines of the unpopular Wall Street bank rescue effort, and blocked action at the end of July. Returning from a monthlong break, two Republicans broke with their party on Tuesday to give Democrats the votes they need to advance the bill.

"While I'm grateful for this progress, it should not have taken this long to pass this bill," Obama said on Wednesday.

Smaller firms have complained of trouble getting access to credit after the 2007-2009 financial crisis, when many banks sharply pulled back their lending activity.

The bill, which is backed by industry groups, would create a $30 billion fund that the government would invest in independent community banks to encourage lending to small firms.

It would also exclude from taxes all capital gains on sales of small-business stock, and ease tax rules for expending

and depreciating equipment. Tax breaks in the bill total $12 billion.

Democrats estimate the measure could create 500,000 new jobs. Some 8 million jobs have been lost since the recession began in late 2007.

Republicans, meanwhile, have invoked small businesses as they oppose an Obama proposal that would raise income taxes on the wealthiest 3 percent of U.S. households, arguing that it would snare many who file business income as personal income.

(Reporting by Andy Sullivan, Editing by Vicki Allen)