They are lending money, they are just not lending money to people with any risk.
This is most problematic for smaller businesses.
For instance, I had my own business and I used my Visa as “float” line of credit. Of course they credit card companies chopped off the line, though I never missed a payment or defaulted.
Why, because the credit line shows up negatively to them. So they just chop off all the credit lines people didn’t use or used responsibly. Then the people who declare bankruptcy did so, so that wiped that mess off their books.
The result is nothing in reality changed but the books look better. After getting government money the banks first obligation is to show they are responsible not they are making money.
The thing is businesses large and small run on credit. No one keeps that much cash for payroll, future projects, and such on hand. It makes no sense, when that money could be working for you.
But the banks simply stopped lending to anyone with the slightest risk.
Now this doesn’t mean you are a bad risk but rather a potental risk. Supposing you go in for a mortage. Now the bank will not only look at how long you’ve been at a job, but the job itself. If you’ve worked for a job for 10 years and earn a good salary, but the company you work for is shaky, then you’re a potential risk and denied.
This explains the oddities that creep up.
So good credit ratings, with long time jobs and good companies with money in the bank will get loan. Without those four your “a risk” and will be denied.
It’s enough to make money on for now.