The Federal Reserve Board expanded its Main Street Lending Program on June 8 to allow more small and medium-sized businesses to receive support. The Federal Reserve Board lowered the minimum loan amount, raised the maximum loan limit, adjusted the principal repayment schedule to begin after two years, and extended the term to five years, providing borrowers with greater flexibility to repay the loans. The Board expects the Main Street program to be open for lender registration soon and to be actively buying loans shortly afterwards.
“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 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.”
- 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 registered, lenders are encouraged to begin making Main Street loans immediately. 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 CARES Act.
For more info, visit https://www.federalreserve.gov/newsevents/pressreleases/monetary20200608a.htm