The Treasury Department will ask Congress to ease restrictions on the use of bank bailout funds so that it can use some of the money to encourage more lending to small businesses, a department official said on Wednesday.

Treasury is considering using about $30 billion from the Troubled Asset Relief Program, or TARP, for programs to boost lending to small businesses.

Another $10 billion of TARP funds could go to the Federal Reserve's Term Asset-Backed Securities Loan Facility, or TALF, which is designed to revive consumer lending and to boost markets that package consumer loans into securities.