1. While it does involve taking on debt, why is credit so important for businesses to function?
2. How do you think people can improve their credit scores in order to look more attractive for loans?
3. How might a lack of demand for business credit affect the economy?

This case discusses the economic impact of the lack of lending to individuals and small businesses following the recent economic recession. Small businesses rely on credit, often using loans to survive slow periods or to finance their expansion. Without this vital resource, many companies have to lay off workers or shut down their businesses.

Although we are currently in a recovery period, bank loans and leases are 3 percent lower than in 2008. There might be a few reasons for this. Due to increased regulation, large banks feel pressured to get rid of their risky loans. This bodes ill for large banks but is good for smaller regional banks that are not subject to these regulatory requirements. Another potential theory for why banks are not lending is that they are provided with an incentive not to lend. Some economists believe that because the Fed is paying banks interest on their reserves, these interest payments are convincing banks to hold more money in reserve. On the other hand, banks state that the reason that they are not extending as much credit is due to lack of demand. Demand does fluctuate, and if this is the reason, then in the near future, banks will be lending more if demand increases.