????Troubled small business lender, its fate in the balance, says it has been told not to expect a federal rescue soon. Shares halted late Wednesday.

????By Colin Barr

????Cash-starved small business lender CIT Group said Wednesday evening that it has been told it won't be getting a government bailout anytime soon.

????There is "no appreciable likelihood of additional government support being provided over the near term," the company said in statement. The CIT board and executives are evaluating alternatives.

????Trading of CIT's shares was halted late Wednesday afternoon.

????CIT (CIT, Fortune 500), struggling with souring loans and an inability to raise money in the markets, has spent recent days trying to persuade policymakers to lend the company a hand. It received $2.3 billion from the federal government's Troubled Asset Relief Program in December.

????Strapped for cash and hit by a series of credit downgrades, the company reportedly hired lawyers last week to prepare for a bankruptcy filing. CIT shares have dropped more than 90% from their 2007 highs as the company's business has gone into free fall.

????The crisis is forcing top officials in Washington to make yet another difficult political decision. Many legislators and taxpayers have voiced their anger about the numerous bailouts that have taken place during the two-year-old financial crisis.

????The White House said President Obama has been briefed on CIT but referred questions to the Treasury Department.

????"Even during periods of financial stress, we believe that there is a very high threshold for exceptional government assistance to individual companies," Treasury spokeswoman Meg Reilly said in a statement.

????CIT didn't immediately return a request seeking comment.

????CIT, with around $65 billion of managed loans, is just a fraction of the size of the financial titans -- ranging from Lehman Brothers and Washington Mutual to AIG (AIG, Fortune 500) and Fannie Mae (FNM, Fortune 500) -- that toppled last year. By comparison, the systemic fallout from a potential CIT failure appears minor.

????But no one knows exactly how hard the firm's failure might hit the struggling economy. And with giant banks such as Goldman Sachs (GS, Fortune 500) having benefited over the past year from hundreds of billions of dollars of federal assistance, policymakers could find it untenable to force a self-proclaimed bridge to Main Street into bankruptcy.

????"We believe not supporting the lender could carry with it the stigma that the government was more willing to bail out Wall Street than small businesses," analysts at research firm CreditSights wrote Wednesday.

????CIT has sought permission to borrow money under the Federal Deposit Insurance Corp.'s debt guarantee program, but the agency -- already facing surging bank failures -- hasn't been eager to add to the burden on its deposit insurance fund.

????In part, that's because CIT has always focused on less creditworthy borrowers -- and it has the writedown numbers to show for it.

????Loan charge-offs -- representing loans written off as uncollectible -- tripled from a year ago to $313 million in the first quarter and are likely to keep climbing. "We expect non-accrual loans and charge-off levels to remain at elevated levels through the remainder of 2009," the company said in its first-quarter report filed with regulators.

????Under CEO Jeffrey Peek, who took over in 2003 after stints at Merrill Lynch and Credit Suisse, CIT expanded beyond its traditional asset-backed lending business into hot areas such as home lending. The company pulled out of that business in 2007, but has been hit by rising loan nonpayments in its corporate finance segment, which includes small business lending.

????CIT has long borrowed in the credit markets to fund its lending activities, but since the credit markets froze in 2007 the firm has had to pull back on its own lending.

????The firm's managed loan portfolio shrank 10% over the past year, according to Barclays Capital data. CreditSights estimates CIT lending supports less than 1% of the U.S. manufacturing and retail business.

????--CNNMoney.com senior writers Jennifer Liberto and Tami Luhby contributed to this report.