During the last several months, it’s been very difficult for small business and entrepreneurs to borrow money because of major business lenders such as Advanta and CIT Group (NYSE: CIT) shutting down or facing severe financial problems.

As a result, President Obama has redirected the remaining TARP funds to smaller banks and small businesses. The new federal initiative through the Small Business Administration may provide operating capital when funding may have been otherwise unavailable.

According to the U.S. Senate Committee on Small Business & Entrepreneurship, The SBA will begin offering an increase in the maximum 7(a) loan to $5 million (up from a maximum of $2 million). The SBA will also offer an increase in the maximum 504 loan to $5.5 million (up from a maximum of $1.5 million and an increase in the maximum micro-loan to $50,000 (up from a maximum of $35,000)

Small businesses have been the engine for innovation and economic growth for the last two centuries in the United States. The majority of Americans work for small businesses, but the majority of the stimulus money so far has been sent to large, national corporations. The Obama administration is now focusing their efforts on small businesses by encouraging them to continue to grow and innovate with new financing options.