The Obama administration is working on a plan that would make available funds from the $700 billion banking-system bailout package to millions of small businesses struggling to survive the recession, FOX News has confirmed.

Gene Sperling, a top adviser to Treasury Secretary Tim Geithner, developed the idea of using funds from the Troubled Asset Relief Program (TARP) to help small businesses as part of a department-wide push to generate ideas to pump life into this ailing part of the economy. 

The concept is to use TARP funds to increase Small Business Administration loans that are obtained when the government backs 90 percent of a bank loan.

It is unclear how much TARP money might be involved. Of the $700 billion appropriated, roughly $127 billion remains. The SBA has authority this year to provide $17.5 billion in loans to small businesses. According to agency records, the SBA provided $6 billion in loans through June.

A senior administration officials told FOX News that Geithner did not specifically endorse this approach, but the idea made it last week before a White House meeting between representatives of the Treasury Department, the Small Business Administration and the president's National Economic Council. The TARP for small business idea would not have made it on to this agenda without some backing at Treasury.

According to an official, "a lively debate on the merits" ensued and the idea -- as with others to aid small businesses - was sent back to the drawing board. "Everyone agreed that the whole topic needed more work," the official said.

"There's a general agreement that it's worth exploring some additional mechanisms to help small business but there's still plenty of debate about how best to do that and whether to move forward," the official said.

FOX News' Major Garrett contributed to this report.