Obama administration officials are working on a plan to help small businesses by using funds originally intended to bail out the banking system, sources said.

The plan would direct billions of dollars to millions of small businesses, using money from the $700 billion bailout plan, The Washington Post reported Friday, citing unnamed sources. The new direction would be aimed at saving jobs, the Post said.

A source told the Post senior Treasury Department officials were floating the idea of expanding an existing program under which small businesses arrange low-interest loans from banks. The loans can be used to acquire inventory, retain workers and service short-term debt.

Under the terms of the existing Small Business Administration loan program, if a small business gets such help and still fails, the federal government covers as much as 90 percent of losses on the federal loan, the Post said.

Treasury Secretary Timothy Geithner expressed approval for the proposal, but National Economic Council Director Lawrence Summers was skeptical, and neither has decided whether to endorse the plan, the newspaper said.

Citing people who were part of, or briefed on, the discussion, the Post said the main concerns focus on whether taxpayers would have sufficient protection and whether banks would loosen lending standards, given the loans would be backed by the government.