WASHINGTON – President Obama is on the verge of creating up to $300 billion in credit for small businesses as bankers raise doubt about whether there’s demand for new loans and how much will be repaid.

The Senate may vote this week on a bill to funnel $30 billion of capital to community banks, whose business customers typically are small firms.

Banks could leverage the sum to make $300 billion in loans that create jobs, according to a Senate summary. That could more than double the commercial and industrial loans at eligible banks as of the first quarter, according to data compiled by KBW Inc.

Bankers say the problem isn’t scarce credit, it’s lack of demand from creditworthy firms in a weak economy. The result may be more loans given to distressed firms and higher losses.

While bank regulators don’t compile default rates, the biggest lenders have charge-offs of 4 percent to 14 percent tied to small businesses. Eliot Stark, managing director at Chicago-based Capital Insight Partners Inc., said their credit record resembles “junk.”

“The highest demand for loans is from the companies least qualified, the companies that have really struggled because of the economic downturn,” Stark said.

Obama’s program passed the House last month and is awaiting Senate approval after disputes over the cost, tax breaks added to the bill and concern that it’s another bank bailout like the Troubled Asset Relief Program.