Krishna Kumar is the director of international research at the nonprofit, nonpartisan RAND Corporation and director of the Pardee Initiative for Global Human Progress at the Pardee RAND Graduate School. Shanthi Nataraj is a senior economist and director of the Labor and Workforce Development Program at RAND. Jonathan Welburn is an operations researcher at RAND. The opinions expressed in this commentary are their own.

The impact on the economy from the coronavirus will be substantial. And while the impulse to do something to help companies right now is both natural and well-intended, there is a danger that policies designed to help businesses weather the current health crisis could lead to defaults on loans or further government intervention, sowing the seeds of a larger financial crisis in the future.

The government's $2 trillion relief package includes $500 billion in assistance to large corporations, $350 billion in new loans for small businesses and over $600 billion for individuals, including $300 billion in cash payments. Some measures in the package are aimed at assisting companies affected by the drastic curtailing of economic activities, such as travel, dining and shopping. These measures are expected to shore up the economy and prevent large-scale loss of jobs. However, this crisis comes at a time of record corporate debt levels , with many companies already at risk.

Since the Great Recession of 2008, nonfinancial corporate debt fueled by low interest rates has ballooned to $10 trillion. In the United States, a whopping 16% of publicly traded companies do not earn enough profits to even pay interest on their debt. And some of the most highly leveraged sectors, such as automotive, retail, restaurants and transportation, are also some of the hardest hit by the current crisis.

Lending to large companies that were highly leveraged pre-crisis is a risky bet. If a coronavirus-induced recession is long and deep and demand for the goods and services provided by these companies does not pick up, these companies will default on their loans. A wave of such defaults could lead to a corporate version of the 2008 subprime crisis, potentially causing disruptions on the scale of the Great Recession.

What then can be done? Assistance to the larger companies should be carefully targeted, with preference given to companies that were financially sound when the crisis hit. This could ensure that scarce resources are allocated most effectively to maximize the chance these companies will pay back their loans when the economy recovers. Interest rates for loans should not be set too low to ensure companies borrow only if they lack cash reserves and anticipate adequate return on their investment.