The Federal Reserve, the central bank of the United States, today June 15) officially opened its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive federal Coronavirus (COVID-19) Pandemic financial support via low-interest loans.
Click on the following Main Street Lending Program links to access: FAQs (Frequently Asked Questions), Key Terms and Borrower’s Webinar.
The Federal Reserve Board of Governors acted on June 8 to lower the minimum loan amount, raise the maximum loan limit, adjust the principal repayment schedule to begin after two years, and extend the term to five years, providing borrowers with greater flexibility in repaying the loans. Click HERE to access press release.
“Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery,” Federal Reserve Board Chair Jerome H. Powell said. “I am confident the changes we are making will improve the ability of the Main Street Lending Program to support employment during this difficult period.”
Small and medium-sized businesses are a vital part of the economy and employ tens of millions of people, and, because their needs vary widely, the Board has extensively sought feedback and revised the Main Street program accordingly.
The changes include:
- Lowering the minimum loan size for certain loans to $250,000 from $500,000;
- Increasing the maximum loan size for all facilities;
- Increasing the term of each loan option to five years, from four years;
- Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and
- Raising the Reserve Bank’s participation to 95% for all loans.
Once they have successfully registered for the program, lenders are encouraged to begin making Main Street loans immediately. The Main Street Lending Program intends to purchase 95 percent of each eligible loan that is submitted to the program, provided that the required documentation is complete and the transactions are consistent with the relevant Main Street facility’s requirements. The Main Street Lending Program will also accept loans that were originated under the previously announced terms, if funded before June 10, 2020.
Nonprofit organizations play a critical role throughout the economy, and the Board is working to establish a program soon for these organizations.
The Main Street Lending Program was established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the federal $2.2 trillion Coronavirus, Aid, Recovery and Economic Stimulus (CARES) Act.