Often treated as an afterthought by the Bush White House, the Small Business Administration has gained newfound prominence under President Barack Obama and its tireless administrator, Karen Mills.

With job creation as its main objective, the SBA is using every tool in its toolbox to make itself more relevant to small business owners and the banks that lend to them. Armed with funds from the $787 billion economic stimulus package it has temporarily lowered administrative fees and raised the government guarantee, to 90 percent, on 7(a) loans; established a no-interest microloan program to aid cash-strapped small businesses; established a program to help auto dealers finance inventories; and created a secondary market for first mortgages made through the SBA's 504 loan program.

The agency also recently began allowing lenders to peg rates for certain loans to the London Interbank Offered Rate, rather than the prime rate, which should widen spreads and, therefore, bank profits. And in what could turn out to be the most significant move of all, the president has proposed legislation that would raise the maximum size of 7(a) and 504 loans from $2 million to $5 million.

The efforts appear to be paying off. Though volume in the fiscal year that ended Sept. 30 was down sharply from a year earlier, it picked up noticeably after the stimulus bill was passed. The $1.9 billion of loans the agency supported in September was its highest monthly tally in more than two years.

Meanwhile, hundreds of community banks that had left the SBA fold in recent years started using its programs again, lured largely by the lower fees and the higher government guarantee.

Still, even in its best years, the SBA will support just a small fraction of the small-business loan market, and it's hard to know if the changes are winning over firms that typically haven't used its programs. The efforts could fall flat, too, if large banks continue to retreat from SBA lending. CNNMoney.com reported in October that big banks are steering more of their small-business borrowers toward variable-interest-rate credit cards, which can be more profitable than fixed-rate SBA loans.

Even so, with Democrats controlling the White House and Congress, expect the SBA to remain in the spotlight. The guarantee level is set to revert back to 75 percent on Feb. 16, but the House has passed legislation that would keep the 90 percent guarantee in place until Sept. 30, 2011.

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