$1 billion set aside for loans to small firms

“These institutions operate in areas where unemployment is way above the national average,’’ said Treasury Secretary Timothy Geithner. “This program . . . is a very powerful way to make sure that we’re starting to open up the credit channels . . . where it’s most needed.’’

The banks will pay 2 percent interest on the investments, lower than the 5 percent that large banks were required to pay under the bank bailout or Troubled Asset Relief Program.

The initiative is the latest in a series of proposals by the Obama administration to spur more lending to small businesses. On Tuesday, President Obama promoted a separate effort to shift $30 billion in TARP funds to a small-business lending program. Obama’s budget calls for a $5,000 tax credit for small businesses that hire new workers.

Administration officials said about 60 banks and thrifts and 150 credit unions would be eligible for about $500 million to $1 billion of investments under the Community Development Financial Institutions program. CDFIs will be able to apply by the end of the month.

In addition, other small banks are worried about the “stigma and restrictions’’ that come with TARP and are reluctant to receive funds from it, administration officials said. That’s why the $30 billion effort announced Tuesday will be a new program that requires approval by Congress. It would use funds from the TARP repaid by large banks.

The CDFIs don’t share those concerns, the administration officials said. Investments in those institutions will come from the bailout fund.