NEW YORK -- CIT Group Inc.'s board approved a deal with major bondholders to keep the company out of bankruptcy with a $3 billion rescue loan, according to published reports.

The emergency loan gives the commercial lender some desperately needed breathing room to refinance maturing debt amid a major liquidity squeeze.

Shares of CIT Group jumped 59 cents, or 84 percent, to $1.29 in premarket trading Monday.

CIT representatives were not immediately available to comment on the reported financing deal.

CIT had been trying to reach a deal with the federal government for emergency funding before talks broke down last week. CIT, one of the nation's largest lenders to small and midsize businesses, had warned that depriving it of more federal aid could imperil about a million corporate borrowers -- from Dunkin' Donuts franchisees to retailer Dillards Inc. But the Obama administration turned down the company's request, showing it's drawing a line on federal rescues for troubled financial firms.

Once talks with government officials fell apart, CIT turned to some of its major bondholders for financial help, reportedly striking a deal Sunday.

The emergency loan would provide temporary financing to CIT so it could launch a debt exchange offer to free itself from upcoming debt maturities. Under the deal, CIT's main bondholders would give CIT $3 billion at an initial interest rate of about 10.5 percent, according to a New York Times report.

The Times said the temporary funding would provide CIT time to launch an exchange of outstanding debt for equity. By swapping debt for an equity stake in the company, CIT would no longer have to pay back the debt, which is essentially a loan. Instead, investors would hold an ownership stake in the company.

CIT would have to put up some of its highest quality loans as collateral for the temporary funding, according to a Wall Street Journal report.

New York-based CIT has been negotiating with six key bondholders, including bond manager Pimco. Jeffrey Peek, the company's chairman and chief executive, was actively involved in the talks, according to a person briefed on the matter. The person spoke to The Associated Press on condition of anonymity because the talks are confidential.

CIT has been scrambling to raise $2 billion to $4 billion. The New York-based lender received $2.3 billion from the government's Troubled Asset Relief Program last fall. That money could be lost if CIT is forced to file for bankruptcy protection.

The lender faces $7.4 billion in debt due in the first quarter of next year.

Completing the financing deal with bondholders could also give CIT time to complete a plan to transfer loans to its banking subsidiary in Utah. CIT, which traditionally used bond and debt markets to finance its operations, could move loans to its banking subsidiary. It would then be able to finance them through deposits at the bank, which are considered a more stable base of funding.

CIT's failure could pose a major threat to the economy, industry representatives have warned. A collapse of CIT could cut off financing just as businesses need it most during the ongoing recession. Its failure could force thousands of companies to drastically cut costs or shut down -- driving up unemployment and dashing hopes for a swift economic recovery

CIT serves as short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation. Analysts say 60 percent of the apparel industry depends on CIT for financing, so other lenders taking up all the slack would pose a big financial strain.

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AP Business Writers Stevenson Jacobs in New York and Alan Zibel in Washington contributed to this report.