COVID-19 will depress the demand for loanable funds as interest rates are higher. The equilibrium interest rate is high as COVID-19 produced less business for many companies. Since demand for these companies was low, interest rate is now high as an effort to reach equilibrium.

Loanable funds are defined by those who want to save supply funds and those who want to borrow to invest demand funds which choose the investment projects that are funded each year. Interest rates directly effect return in investments because the higher the interest rate the higher ROI. During a recession ROI would decrease immensely, as the value of stocks would decline, making the demand for money much greater. The opposite can be said for an economic boom: as stocks increase ROI increases and the demand for money decreases.