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Sweet on Small Loans

Who's afraid of the big bad Fed? When the Federal Reserve boosted interest rates in June and again in August, small-business lenders barely blinked. Only 1.9% tightened credit standards -- the lowest percentage of the year -- and lending spreads stayed flat. Things are just going too well. August was 1999's strongest month for retail sales, up 10.5% from last year. Of course, such good news could prompt the Fed to hike rates another 1/4%. But even that would only bring small-loan rates back to year-ago levels -- still among the lowest in five years.

This article was originally published in the October 11, 1999 print edition of Business Week's frontier. To subscribe, please see our subscription policy.



CHART: The Net Percentage of Banks Tightening Credit

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