Boosting credit to struggling small businesses is key to the economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday.

To support the recovery, we need to find ways to ensure that creditworthy borrowers have access to needed loans, he said in remarks prepared for delivery to a Fed-sponsored conference on small business financing.

Small businesses are important in creating new jobs, the Fed chairman said.

A big drop in bank lending has aggravated the wobbly recovery. Total loans held by commercial banks fell by 5 percent in 2009 and lending has continued to contract this year, Fed officials have said recently.

Bernanke said lower demand, tighter credit terms and the weaker financial position of many businesses following the painful recession were all factors holding back lending.

Businesses continue to report that credit conditions remain difficult, he said. The Fed takes very seriously complaints by bankers that bank examiners often prevent institutions from making good loans, he added.

Banks have found themselves particularly crimped by the declining value of real estate and other collateral they use to secure their loans, he said.

(Reporting by Mark Felsenthal; Editing by Andrea Ricci)

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