WASHINGTON (AP) — A $30 billion government fund would be available to community banks to increase lending to small businesses under a bill passed by the House Thursday as congressional Democrats tried to revive their election-year jobs agenda.

House Democrats projected that banks would use the fund to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. Republicans called the bill another bank bailout that would do little to increase lending to small businesses.

The bill passed by a vote of 241-182 as congressional Democrats struggled to balance election-year concerns about high unemployment with voter complaints about the rising national debt. Only three Republicans voted for the bill.

The bill now goes to the Senate, where Democrats tried to round up support for legislation to renew pieces of last year's economic stimulus bill. The measure would combine jobless aid for the long-term unemployed, aid to cash-strapped state governments and the renewal of dozens of popular tax breaks for businesses and individuals.

Congressional Democrats began the year with an aggressive agenda of passing a series of bills designed to create jobs. One has become law, offering tax breaks to companies that hire unemployed workers. Others stalled as lawmakers, after hearing from angry voters, became wary of adding to the national debt, which stands at $13 trillion.

House Democrats emphasized that their small business bill would not add to the debt, according to projections by the nonpartisan Congressional Budget Office.

Banks that tap the $30 billion fund would issue preferred stock to the Treasury Department, paying dividends based on how much they increase lending to small businesses. The more they lend, the lower the payments. The stock would have to be redeemed within 10 years.

President Barack Obama said the lending bill "marks a new and significant step toward getting small businesses the financing they need to start up, expand and hire more workers."

The bill would provide $2 billion to assist states in their efforts to increase loans to small businesses. It would also authorize the Small Business Administration to match up to $1 billion in private investment in small startups.

"In a world where revolutionary new products are conceived in dorm rooms and companies are started in garages, we need new ways of meeting businesses' capital needs," said Rep. Nydia M. Velazquez, D-N.Y., chairwoman of the House Committee on Small Business.

Republicans said the bill offers no guarantee that small business lending will increase.

"It's really just another bank bailout," said Rep. Virginia Foxx, R-N.C. "What you are doing is, you're creating government."

The bill will now be merged with a package of tax breaks to encourage investment in small businesses that passed the House on Tuesday. The package, which goes to the Senate as one bill, would provide about $3.6 billion in tax breaks over the next decade.

Long-term investors in some small businesses would escape capital gains taxes. New small businesses could take larger tax deductions for startup expenses.

The bill includes tax increases that would offset the tax cuts and pay for the lending bill. The main tax increase would limit taxpayers' ability to avoid gifts taxes by setting up trusts known as Grantor Retained Annuity Trusts, or GRATs.

Across the Capitol Thursday, Senate Democrats easily turned back a Republican effort to cut money from the president's economic stimulus package and other government spending to pay for an extension of unemployment benefits and aid to doctors.

Republicans were on the losing end of a 57-41 vote on the measure, which would have cut stimulus dollars and other spending to finance a six-month extension of unemployment checks for people who've been out of work for more than six months.

The vote came as Senate Democratic leaders tried to shore up support for a scaled-back version of their jobless aid bill, which would renew parts of last year's economic stimulus package.

Obama renewed his push for the measure last weekend, warning that "hundreds of thousands" of state and local government jobs could be lost without $24 billion in Medicaid money to help states balance their budgets and $23 billion more to prevent layoffs at local school districts around the country.

The Senate bill includes $24 billion for Medicaid, but none for teachers. The bill would add $55 billion to the deficit over the next decade, according to a Congressional Budget Office estimate.

"It's moving in the right direction but it's not there yet," said Sen. Susan Collins of Maine, a key GOP vote sought by Democrats.


Associated Press writer Andrew Taylor contributed to this report.