Goldilocks and Small Business Credit

Photograph by Martin Poole/The Image Bank/Getty Images

The Federal Reserve’s effort to manage small business credit is like the story of Goldilocks and the Three Bears. Small business credit can be too hot, with lenders providing too much financing, or it can be too cold, with too little available. The Fed’s job is to get the amount of credit just right, ensuring that the banks provide creditworthy businesses with the capital they need while denying it to those that are too weak to handle the debt.

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