Money Costs More Money

If the Fed's goal is to slow the economy by making it harder to get loans, it seems to be succeeding--as far as entrepreneurs are concerned. Interest rates for commercial loans of less than $100,000 reached a two-year high of 9.65% in the central bank's first-quarter survey. The Fed also found in a separate report that 9.4% of domestic banks tightened terms on loans to small firms, vs. just 5.7% three months earlier. Why? Here's a clue: Half the lenders said delinquency rates have been on the rise since early 1998.

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