The measure could test the ability of the Democrats in control of both chambers to find money to help the state emerge from a hard recession.

SALEM — Oregon legislators have taken up a measure that Democratic leaders say is a key part of their agenda for the 2010 special session — a bill that would provide easier access to state loan funds.

The measure could test the ability of the Democrats in control of both chambers to find money to help the state emerge from a hard recession.

The measure went before the House Committee on Sustainability and Economic Development on Tuesday. Among its provisions: Lifting a cap that restricts some loans from the Oregon Business Development Fund to less than half a project's cost and allowing quicker approval of small loans, up to $250,000.

The revolving fund, which is managed by the Oregon Business Development Department, was created in 1983. It typically supplements private lending in economic development projects.

An official said the fund totals about $30 million, with about $22 million out on loan and applications pending for much of the balance.

Backers of the bill say there's about $3 million uncommitted and the Legislature could use revenue from a tax amnesty program to beef up the fund.

Whether that's possible depends on a revenue forecast due Monday that's widely expected to show projections off by $100 million. That will lead to a debate over how much to pull out of reserves, how much existing programs can be pared, and what new spending is possible, such as a possible injection of money into the business loan fund.

A lobbyist for a trade group of public and private economic development specialists told the committee Tuesday that what the fund really needs is an injection of capital.

Easing access to the money is a good thing but besides the point right now, said Jack Isselmann of the Oregon Economic Development Association.

Demand for the loans is so great that the money will all be lent quickly and after that, "We won't be doing deals," he said.