Should small and medium companies be given more funding and resources?

There are many governments that have made many policies to help small and medium businesses, especially in some countries, the majorities of their populations work in small and medium businesses. However, is it reasonable to encourage financial intermediaries to provide funding for the small and medium businesses above their previous levels?

Firstly, we have to assume that financial intermediaries make their financing decisions completely rationally. Once governments impose any policies, financial intermediaries still behave rationally, so in order to make financial intermediaries lift their lending (financing) levels, the governments have to increase the financial intermediaries’ possible profit rates or low the financial intermediaries’ risk levels. To increase the financial intermediaries’ profit rates, the governments can provide subsidies for the financial intermediaries when they lend to small and medium businesses. However, to lower the risk levels, the governments transfer some of the risks taken by the financial intermediaries to the governments themselves. Therefore, governments need to choose whether they are willing to bear more risks or expand their spendings. 

To conclude, when governments want financial intermediaries to lend more than they usually do, the governments have to increase the risks taken themselves and increase the budget deficits, which only involves large public costs.