Goldman Sachs Group Inc. (GS) said Monday it is in talks to potentially amend the terms of a $3 billion loan to embattled CIT Group Inc. (CIT).

"Goldman Sachs is working with CIT to enable it to continue to use the facility, which we believe gives it its most attractive cost of funding," Goldman spokesman Michael Duvally said.

The investment bank is on tap to receive about $1 billion if troubled commercial lender CIT were to file for bankruptcy.

The investment bank extended $3 billion in rescue funding to CIT in June 2008, according to regulatory filings. The 20-year contract calls for CIT to pay Goldman 2.85% of the maximum amount lent, which would come to about $85.5 million annually for the first 10 years of the agreement. CIT would be required to pay $1 billion if it were to file for Chapter 11 bankruptcy.

Jeffrey Peek, CIT's chief executive, is attempting to persuade bondholders with about $31 billion in debt to swap that for new secured debt worth at least $5.7 billion less and to extend debt maturities. If enough creditors sign on, this reduction in debt load will help CIT avoid bankruptcy court, for now. The company warned in July it may be forced to file for a pre-packaged bankruptcy after it failed to get additional financial aid from the government.

The company secured a $3 billion rescue loan from a group of its six largest bondholders, including Pacific Investment Management Co., Oaktree Capital, Silver Point Capital, and Centerbridge Partners, at the end of July.

CIT, a century-old company that is one of the largest lenders to thousands of small and medium-size businesses, pays roughly 10% interest on its latest loan. Goldman's loan, made before CIT acknowledged massive financial problems, charges about 3% interest.

Duvally said the $1 billion payment the investment bank would receive in the event of a CIT bankruptcy "would not be a windfall payment." It instead would reflect the "present value of the spread to be earned over the life of the facility," Duvally said.

CIT couldn't immediately be reached for comment.

Shares of CIT were up four cents, or 3.4%, to $1.21 in recent trading on the New York Stock Exchange. Goldman's stock jumped $4.57, or 2.5%, to $184.18.

-By Joe Bel Bruno, Dow Jones Newswires; 212-416-2469; joe.belbruno@dowjones.com