Fears about the impact of the credit crunch on small business have become so widespread these days that even fiscal conservatives like William Weld, Republican governor of Massachusetts, have begun to unveil programs that make government a provider of credit to small companies that have been shunned by commercial banks. As I've said in this space before, I simply don't see evidence of a banker-induced credit crunch. What I do see in our current disinflationary environment is a dramatic decrease in the demand for credit from qualified borrowers.

To be sure, banks have tightened up the credit process. The evaluation of cash flow and of collateral adequate to cover loan requirements is more rigorous than before. Whatever the reason for the change, be it pressure from regulators or internal reexamination of bank policy, this "new" rigor has in fact characterized the practices of the best small-business lenders in any environment. The blame belongs squarely on the shoulders of those banks that eased their requirements during the fierce battles for market share among "middle market" companies in the 1980s. It's little wonder that to the customers of those institutions, it looks as though their banks are abandoning them just when the going's getting tough.

If we're doling out more blame these days than credit, then there's plenty to go around in the Inc. world as well. If I had a share of stock in every company whose CEO has told me that as a matter of sound business principles he's dealt with his banker in an honest and forthright manner, I'd still be a man of modest means. What I detect all too frequently from company owners about access to any kind of capital, be it debt or equity, is a sense of entitlement: we'll accept the money, thank you, but not the accountability that goes along with it. Perhaps it's time for some soul-searching in the Inc. community as well. Perhaps it's time for less talk about spineless bankers, vulture capitalists, and myopic shareholders and a bit more reflection on just how solemnly we view our financial obligations. If you're put off by what might sound like moralizing, perhaps it's more constructive to think of it this way: we'd better shape up, because market forces are demanding it.

Concerning the matter of public policy, I must say that this notion of government as lender of last resort is enough to make someone who believes in the efficacy of markets wonder. As far as I can determine, well-managed commercial banks actually make money by extending credit -- even to small companies. So when lenders turn down an apparent opportunity to do so, the prudent elected official should stop and ask why.