With leaders in the Senate building a new package to protect the economically vulnerable and spur job creation, legislators are trying to figure out ways to increase lending to small businesses. The problem came into full focus last month, when a report from the Treasury Department found that in the past six months, the 22 banks that received the most funding through TARP shrunk their collective small business loan balances by $10.5 billion.

The landscape isn't likely to improve without some government intervention. While the stimulus bill successfully increased the government guarantee on the Small Business Administration’s main loan program to 90 percent while eliminating or reducing fees on SBA loans, that money is now running out. There's been talk of extending tax credits to small businesses that expand their payroll, but, so far, no progress. Meanwhile, the Treasury Department is working out the final details on a plan to use TARP funds to provide low-cost capital to community banks.

With hopes of finding some solutions, members of the Senate Democratic Policy Committee convened hearings on Capitol Hill today to hear from a variety of small business owners impacted by the credit crunch. Chicago restaurateur Ivan Matsunaga, the owner of two Connie’s Pizza franchises, told his story. Struggling to get a loan so he can upgrade his location at McCormick Place, the veteran and credit-worthy entrepreneur could lose his lease -- and thus abandon his workforce -- if he can't secure enough credit by the start of the new year to make some changes his landlord is requesting. Watch some clips from his testimony: