How does the current Fed strategy help small business right now? If anything, it seems like this strategy will leave larger companies in a position to soak up those small businesses' market share when this is all over.

Indirectly, by avoiding a liquidity crunch.

Specific direct aid is called fiscal policy, and would have to be enacted by Congress (or possibly to a limited extent by the executive): reduced taxes, direct payments or credits, loan guarantees, government spending, other economic policy.

The Fed's tools are monetary policy, and manipulate the overall money supply. That's a powerful, but limited, power.

The Fed is set to announce small business loans very soon. This is just part of a larger plan.

I'm really curious how startups are positioning themselves for the availability of such loans. Might the terms be so favorable that it drives out the VCs?

Unlikely. Even in these troubling times the fed likes to have assets backing loans. Maybe an SBA program could be competitive but not in the near term.

>> 1. Nobody would buy them.

Sure they would. If you price it correctly.

>> 2. Small biz doesn't have access to corporate paper markets, even in the best of times.

Not true. I am a SMB owner and have secured a LOC for my business as well as refinancing of my house personally. It's out there. Just at prices you might not like. But then again, we aren't guaranteed good prices. Or at least, we shouldn't be.