WASHINGTON — Senate Republicans blocked a bill to increase small business lending today, dealing a setback to President Barack Obama's jobs agenda.

The bill would create a $30 billion government fund to help community banks increase lending to small businesses, combining it with about $12 billion in tax breaks aimed at small businesses. Democrats say banks should be able to use the lending fund to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets.

The fund would be available only to banks with less than $10 billion in assets. Some Republicans, however, likened it to the unpopular bailout of the financial industry.

Senate leaders said they will continue to negotiate amendments to the bill. But today's vote will make it difficult for Congress to pass it before lawmakers go on summer vacation. The Senate is in session for another week; the House is scheduled to adjourn Friday.

By The Associated Press