After the  U.S. House passed the Small Business Lending Fund Act (SBLF) in early July, the bill went to the Senate. What happens now?

As reported earlier, the legislation, H.R. 5297, was supposed to provide an incentive for community banks to increase small-business lending. The key component of the bill was a $30 billion appropriation that would go to the banks for loans to small businesses. Now the race is on to finish work on the bill in the Senate before its August recess.

Democrats in general support the bill; Republicans don’t. That division should tell you something about chances of agreement — and passage — by the recess deadline.

Here’s where the two sides disagree: Democrats are adamant that the $30 billion should remain the centerpiece. Republicans are calling it a TARP-style “bailout” and don’t want a “yes” vote on their records in the next election. And the standard bearer for that objection is none other than Sen. Olympia Snowe, the Republican who has crossed the aisle to vote with Democrats on other key pieces of legislation. She says she won’t vote for the bill if the $30 billion stays.

So, what’s the best bet about where the bill is headed? Chances are, the Democrats might concede and drop the $30 billion component. Here’s what would remain — and stand a chance of Senate approval:

• about $12 billion in tax breaks for small businesses, including provisions that would allow quicker tax write-downs of capital expenditures, known as accelerated depreciation
• a break on capital gains taxes from the sale of certain small-business stock if the stock is held for more than five years
• expansion of several Small Business Administration loan programs, along with increasing loan limits and, in some cases, eliminating borrower fees
• a carryback provision that would allow small business to use general business tax credits to offset their tax bills from the previous five years

We should know by August whether any or all of that makes the cut on Capitol Hill.