Chrysler Group LLC's application for federal loans is moving ahead and will not be affected too much by proposed cuts in the Obama administration's budget, the head of the U.S. Department of Energy said on Monday.

We're moving ahead with Chrysler. I don't think it's affected that much by this (FY2012) budget, said U.S. Energy Secretary Steven Chu, said during a call with reporters.

A DOE spokeswoman said the department is still in the due diligence phase with the Chrysler loan application.

Chrysler CEO Sergio Marchionne said last month that the automaker had applied for some $3.5 billion in low-interest loans from the DOE to retool its plants and build more energy-efficient vehicles.

The loans are also crucial to help the automaker speed its payback of pricey loans from the U.S. government taken out as it went through a government-funded bankruptcy in 2009.

Since the bankruptcy, Chrysler has been managed by Italy's Fiat SpA .

(Reporting by Tom Doggett, editing by Dave Zimmerman)

Barack obama Chrysler