* Chamber of Commerce says loan program creates jobs
* Cut in loan program could hurt Chrysler
By John Crawley
WASHINGTON, Sept 22 (Reuters) - The biggest U.S. corporations urged Republicans on Thursday to abandon plans to strip ${esc.dollar}1.5 billion from a government loan program supporting efforts to make more fuel-efficient cars and trucks.
The credit subsidy has become a surprise flash point in stalled congressional efforts to pass short-term spending legislation to keep the government operating beyond Sept. 30.
A letter addressed to all members of the House of Representatives from the Chamber of Commerce signaled intensified lobbying around the auto issue with Republicans scrambling to find enough votes to pass their spending plan.
The letter said U.S. business "recognizes that Congress must make difficult but necessary choices" on finances. But the group stressed that the Energy Department Advanced Technology Vehicle Manufacturing program had helped create jobs in a "sector of the economy critical to the nation's recovery."
Additionally, the Chamber of Commerce "urges you to bear in mind" that the loan program promotes manufacturing and is an "important component of America's energy security."
The lobbying push also included manufacturing, supplier and automaker trade groups.
Ford Motor Co <F.N>, Nissan Motor <7211.T>, start-ups and other companies have been awarded more than ${esc.dollar}9 billion in loans to retool factories and develop technologies for making more gasoline/electric hybrids and electric vehicles.
Nearly halving the account that holds ${esc.dollar}4 billion in available funds would at best complicate prospects for 11 loan applicants, including Chrysler, which is run by Italy's Fiat <FIA.MI>.
Chrysler, which was bailed out and forced into bankruptcy by the government in 2009, has applied for roughly ${esc.dollar}3.5 billion in assistance.
The company would not comment on prospects for a loan, but sources with knowledge of the program said the automaker was in the final stages of negotiations with the Energy Department to receive financing.
The Obama administration has said it hopes Chrysler will qualify for a loan but deferred any decision in part until the automaker refinanced its bank debt. Chrysler did so earlier this year.
Republican leaders considered options for rewriting the stop-gap funding measure that would keep annual government spending at a ${esc.dollar}1.04 trillion level rejected by the House on Wednesday.
One option under consideration, according to congressional aides and other sources familiar with the budget plan, was to end Republican efforts to cut the loan account by ${esc.dollar}1.5 billion.
Republican leaders want to use that money for disaster assistance, and it was unclear what approach would emerge to capture enough lawmaker support for the spending bill.
The proposed cut has energized Democrats, with the charge led by Representative Gary Peters of Michigan, who represents the district that is home to Chrysler headquarters. Debbie Stabenow, who pursued the original legislation that created the loan program in 2007, has been the point person in the Senate.
That chamber has yet to consider similar legislation but its Democratic majority opposes any reduction in the loan program. (Additional reporting by Thomas Ferraro and Andy Sullivan; Editing by Peter Cooney)
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