In its January 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices released Monday, the Federal Reserve determined that the 78 respondents generally ceased tightening standards on many loan types in the fourth quarter, but have yet to unwind the considerable tightening that has occurred over the past two years. You can read the full results here.

As it often does in the survey, the Fed included some special questions for respondents. One area the central bank tried to dig into in its latest questionnaire was small business lending.

Specifically, the Fed wanted to know how loans to small businesses stacked up against those to large and middle-market firms. Probably not surprisingly, the majority of banks reported that loans to small businesses performed worse than those to larger firms. Of the 54 respondents to the question, seven (13 percent) said the delinquency rate for small firms was substantially higher than the rate for large and middle-market firms. And another 30 (56 percent) said small firm delinquencies were moderately higher. Only two banks said delinquencies among small firms were moderately lower when compared to larger businesses and the remaining 15 respondents said they were about the same.

In terms of their outlook for 2010, banks were notably more bearish when it came to the credit quality of small firms. More than a quarter of respondents (26 percent) said they expected the quality of loans to small firms to deteriorate somewhat this year, compared to 17 percent forecasting a similar deterioration for larger firms.

These special questions underscore how small businesses have become a focal point of the Obama administration and its attempts to revive the economy. And the responses they received show how difficult it will be to stimulate. The president has continuously urged bankers to boost their lending to small businesses, but given the findings of the Fed survey they are understandably timid.

Additionally, the Fed survey suggests firms don't necessarily even want more loans. Only two banks reported moderately stronger demand for loans from small firms, while 18 reported weaker demand. In all likelihood, healthy firms are unwilling to take on the burden of additional debt in such uncertain times.

As CFOZone reported today, the small business tax credit proposal may have the effect of encouraging businesses to increase the number of hours existing employees work rather than hire new workers. Yes, I'd wager it's much more likely that we'll see a slow ramp up rather than a rapid expansion in this environment.

So the real challenge for the Obama administration is getting firms confident enough to borrow, build and hire. We certainly haven't heard a proposal that does that yet.