On Thursday, the Federal Reserve acted to provide up to $2.3 trillion in loans to aid the United States economy by assisting businesses of all sizes. Most notably, they released information on their Main Street Lending Program.
While the Paycheck Protection Program applying to small businesses has received significant coverage, the Federal Reserve is also enhancing its Main Street Lending Program, which supports small- and mid-sized businesses. The program will offer four-year loans to businesses that were in good financial standing before the crisis and who employed up to 10,000 workers or had revenues of less than $2.5 billion. Principal and interest payments on these loans will be deferred for one year. Banks participating in the program may provide new loans or increase the size of existing loans they have made to businesses. Banks will retain a 5 percent share, selling the remaining 95 percent to the Main Street facility, which will purchase up to $600 billion of loans.
Any business that seeks a Main Street loan must commit to making “reasonable efforts to maintain payroll and retain workers” and must follow restrictions that apply to direct loans under the CARES Act. Notably, a business may take advantage of both Main Street loans and the Paycheck Protection Program if it is eligible for both.
The Federal Reserve and Treasury are seeking comments on the program until April 16, to ensure that it supports the economy as effectively and efficiently as possible. The feedback form is available here and you can read the full press release from the Federal Reserve here.