Similarly, improving interbank funding markets and restoring public confidence in banks and other financial institutions benefits small businesses – again, indirectly – by lowering intermediaries' and thereby small businesses' borrowing costs and increasing the volume of loans that banks can extend.
The temporary increase in FDIC deposit insurance coverage should reinforce these effects by further strengthening public confidence and providing additional liquidity to FDIC-insured institutions. Importantly, some of these policy actions will also directly benefit small businesses.