small businesses

Free money? Yes, but only for the biggest.

November 10, 2010: 12:09 PM ET

Many of America's top companies have taken advantage of record low interest rates, but access to cheap debt is still far from reach for the smaller guys.

Coca-Cola Co. (KO), Microsoft Corp. (MSFT) and Wal-Mart Stores Inc. (WMT) are among those that have taken advantage of borrowing rates near 0%. Last week, Coca-Cola announced plans to sell $4.5 billion of bonds in its biggest offering ever -- it plans to use the funds to reduce interest costs from existing debt. It followed Wal-Mart's sale last month of $5 billion of debt, some of it at a record-low coupon of 0.75%. And Microsoft is paying just 0.875% for a portion of its $4.75 billion bond offering in September.

But unless you're a corporate giant with relatively expansive access to credit and bond markets, don't count on benefiting from policy decisions of the U.S. Federal Reserve. Although the Fed has kept key interest rates at nearly zero in hopes to keep the slow recovering economy chugging along, small and medium-sized businesses – the engines of job growth – aren't exactly locking in record-low borrowing costs.

Many smaller businesses find themselves having to pay more for loans, even though credit conditions have improved some, says Chris Christopher US economist with the economic forecasting firm IHS Global Insight.

For smaller private businesses, several factors limit owners' access to cheaper credit. Unlike large corporations, smaller businesses overwhelmingly borrow from regional banks, which often have a better sense of the businesses' operations and financial health given that it's relatively less transparent than a public company. More

  • The Fed goes interactive

    If you're dying to stand in Ben Bernanke's shoes for a moment, the Federal Reserve has just the ticket.

    It's called The Fed Experience and it's opening tomorrow at the Richmond Fed in Virginia.

    The "interactive, multimedia exhibit" aims to show viewers how the Fed improves living standards by keeping prices stable.

    Visitors will have a chance to "grab a few of your friends and play the price stability challenge," for instance, which MORE

    - Jul 12, 2010 11:42 AM ET
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