The cost of this access to finance can also be a factor. Creditworthiness of enterprises is definitely an issue for financiers. So what can we do to help our SMEs be in a position to be eligible for loans? This is a tricky one to address and opens up the third issue, which may help in some way.
Actually, the authors' calculation is a bit more complicated than my simple characterization. They assume that the target leverage of banks and others decreases, as it has in previous lending cycles, but they also net out reduced lending from one leveraged entity to another. On balance, under their baseline scenario, they predict that lending to the unleveraged sector will decline by about $ billion.