Fixed rate loans are usually more expensive than floating rate loans. The 1980's were a time of business expansion and financial innovation. At the end of the decade, in the face of a slower growth economy, businesses began to reconstruct their balance sheets, reducing their debt through asset sales or equity refinancing. By 1991, both the small business demand for funds and the available supply of funds were down from levels of the previous decade. Many banks clearly tightened loan criteria during the year and many small businesses appear to have acted cautiously as well, postponing investment projects and loan requests.
Studies show that small firms produce twice as many innovations per employee as large firms.