NEW YORK, June 23 - The U.S. Department of Energy expects to soon set out rules for $6 billion in loan guarantees included in the stimulus package to fund renewable energy projects and is working to set up a small business program, a DOE official said on Tuesday.

As part of a push to reign in carbon dioxide emissions and develop alternative energy sources, the Obama Administration included the loan guarantees in the $787 billion stimulus measure that was enacted earlier this year to help prop up the U.S. economy.

Those loans reduce borrowing costs for solar and wind power developers and enable them to raise additional money from banks to build new alternative energy sources.

"We are working as rapidly as we can to develop (the program's) marketplace and get it to you in the market," David Franz, directors of the DOE's loan program told the Renewable Energy Finance Forum.

But with only 71 employees working on the loan program, progress has been slow.

Solar and wind companies have seen financing for new projects dry up over the past nine months as the crisis in the financial markets drove many banks to halt funding of renewables, hurting the U.S. operations of companies such as SunPower Corp (SPWRA.O) and Vestas Wind Systems (VWS.CO).

Franz said the DOE would take extra care to make sure the process for screening the applications was rigorous.

"We behave like senior lenders," he said. "We're very careful and diligent in our lending and I think this explains some of the delay in getting it out."

The $6 billion in loan guarantees is in addition to $42.5 billion in loan guarantees that have been authorized under energy legislation passed in 2005, but which have not yet been finalized.

Less that two percent of U.S. electricity comes from wind and solar sources, although those systems have been growing rapidly in the past two years. More than 40 percent of new power generation added in the United States last year was from wind farms.

Many of those loan guarantees are likely to help fund development of large projects, and Franz said the DOE was working to create a mechanism that would help smaller players in renewable energy.

"We are working on a small business loan program to allow small and medium businesses to have access," he said.