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We study the distribution of credit during crisis times and its impact on rm indebtedness and macroeconomic risk. Whereas policies can help firms in need of financing, they can lead to adverse selection from riskier firms and higher default risk. We analyze a large-scale program of public credit guarantees in Chile during the COVID-19 pandemic using unique transaction-level data on credit applications, approvals, and loans for the universe of banks and firms, matched with administrative tax data. The program distributes credit amounting to 4.6% of GDP and increases rm leverage. Although demand channels credit toward riskier firms at the micro level, macroeconomic risks remain small. Several factors mitigate aggregate risk: the small weight of riskier firms, the exclusion of the riskiest firms, bank screening, contained expected defaults, and the government absorption of tail risk. We quantitatively con rm our empirical findings with a model of heterogeneous firms and endogenous default.