Republicans characterize the bill as a smaller version of the Wall Street bank rescue effort.
President Barack Obama signed a $30 billion small business lending bill into law on Monday, claiming a victory on economic policy for his fellow Democrats ahead of November congressional elections.
The law sets up a lending fund for small businesses and includes an additional $12 billion in tax breaks for small companies.
"It was critical that we cut taxes and make more loans available to entrepreneurs," Obama said in remarks at the White House. "So today after a long and tough fight, I am signing a small business jobs bill that does exactly that."
Obama is trying to show voters, who are unhappy about 9.6 percent unemployment, that he and his party are doing everything they can to boost the tepid U.S. economy.
Democrats said they backed the bill because small businesses had trouble getting loans after the financial crisis that began in December 2007. They estimate the incentives could provide up to $300 billion in new small business credit in the coming years and create 500,000 new jobs.
Republicans characterized the bill as a smaller version of the unpopular Wall Street bank rescue effort and blocked it in the Senate for weeks until two retiring Republicans broke ranks and voted to end blocking maneuvers.
Republicans are expected to make big gains in the November 2 elections and hope to win majorities in one or both houses of Congress.
Obama criticized the opposition party for fighting the bill and thanked the two Republicans, George Voinovich and George LeMieux, whose support allowed it to get through the Senate.
He said the measures would have fast-acting effects on the small business community, which both political parties are courting in an effort to boost jobs.
"It's going to speed relief to small businesses across the country right away," Obama said. "We've got to keep moving forward. That's why I fought so hard to pass this bill, and that's why I'm going to continue to do everything in my power to help small businesses open up and hire and expand."