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The Obama administration is considering providing loan guarantees to auto dealers, many of whom have been pushed to the brink by the troubles of General Motors Corp. (GM) and Chrysler LLC.

The U.S. Small Business Administration is in serious discussions with the Treasury Department's auto task force about extending loan guarantees to dealers so they can purchase vehicles to stock their showrooms, Jonathan Swain, the SBA's assistant administrator, said Friday. Details, including the timing and potential size of the guarantees, haven't been worked out.

Auto dealers are eligible for SBA loan guarantees for certain purposes, but not for so-called floorplan financing, Swain said. Expanding SBA guarantees to cover floorplan financing has been done once - under a directive by President Jimmy Carter during a similar crisis facing auto dealers in 1980 - Swain said.

"Our regulations have never permitted us to do it, except for the rare exception when the president elected to do it in 1980," Swain said.

Dealers have found it increasingly difficult to obtain loans amid the broader credit squeeze and the plunge in auto sales. The bankruptcy filing of Chrysler LLC and the likelihood of a filing by GM has tightened the squeeze amid fears that the values of those companies' vehicles will plummet, thereby making it harder for dealers to pay back the loans.

The National Automobile Dealers Association has met with President Barack Obama's auto task force on the issue. The association has urged the implementation of guarantees that would help prevent dealer failures that could result from so-called clawback provisions, which allow finance companies to demand at least partial payment of dealer inventory loans in the event of an auto-maker bankruptcy.

NADA officials weren't immediately available for comment Friday.

The prospect of government aid follows announcements by GM and Chrysler this week that they planned to radically cut their dealer networks as part of their restructuring.

-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com