April 21 (Bloomberg) -- Chrysler Financial, the finance affiliate of Chrysler LLC, was turned down for additional U.S. loans from the Troubled Asset Relief Program because of pay limitations on senior executives, a government report said.

The finance company failed to get its top 25 executives to sign compensation waivers and the loan request was denied, according to the report from the special inspector general for the TARP.

Chrysler’s finance arm had sought more aid from the government program after using all but $375 million of an initial $1.5 billion loan made in January to help make retail financing more widely available to customers.

The finance company said in a statement last week that it had adequate capital and didn’t need the additional money. A person familiar with the talks said stipulations on the loan were too onerous.

“Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and as such, no additional TARP funding is necessary at this time,” said Amber Gowen, a company spokeswoman in a statement on April 16. She declined to comment on today’s report.

Automakers’ Cash

Chrysler, the automaker, will get another $500 million for operations after getting a loan for $4 billion in January. The automaker has until May 1 to forge an alliance with Italian automaker Fiat SpA to qualify for as much as $6 billion more in loans from the government. The U.S. Treasury had said it would extend working capital to Chrysler and General Motors Corp. while they worked toward restructuring deadlines.

GM, the largest U.S. automaker, will receive $5 billion, the official said. GM Chief Executive Officer Fritz Henderson said last week the automaker needed $4.6 billion more this quarter. Detroit-based GM must eliminate most of its unsecured debt, reach a new labor agreement and come up with a new business plan by June 1.

President Barack Obama’s auto task force determined that restructuring plans submitted by Auburn Hills, Michigan-based Chrysler and GM weren’t sufficient and set new deadlines for the automakers.

GM’s Henderson said bankruptcy is more probable and the U.S. government has said it will stand behind the automaker to ensure it continues to operate. The government said Chrysler must reach a deal with Fiat or it won’t get any more U.S. aid. Chrysler, the third-largest U.S. automaker, will likely be liquidated in bankruptcy without more aid, the company has said.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan at mramsey6@bloomberg.net

Last Updated: April 21, 2009 00:01 EDT