Federal Reserve Expands Scope of Main Street Lending Program

May 1, 2020 by Dan McCue
Federal Reserve Expands Scope of Main Street Lending Program
The Federal Reserve (Photo by Dan McCue)

WASHINGTON – The Federal Reserve said Thursday it is expanding the scope and eligibility for the Main Street Lending Program, a vehicle created to help credit flow to small and medium-sized businesses that were in sound financial shape before the pandemic.

When the initial terms of the Main Street program were announced last month, the central bank said because the financial needs of businesses vary widely, it was seeking feedback from the public on potential refinements. 

Since then, the Fed Board said, it has received more than 2,200 letters from businesses and nonprofits. 

In response to the public input, the Board decided to expand the loan options available to businesses, and increase the maximum size of businesses eligible for support under the program. 


The changes include:


  • Creating a third loan option, with increased risk sharing by lenders for borrowers with greater leverage;
  • Lowering the minimum loan size for certain loans to $500,000; and
  • Expanding the pool of businesses eligible to borrow.

Under the new loan option, lenders would retain a 15% share on loans that when added to existing debt do not exceed six times a borrower’s income, adjusted for interest payments, taxes, and depreciation and other appropriate adjustments. 

This compares to the existing loan options where lenders retain a 5% share on loans, but have different features. Under all of the loan options, lenders will be able to apply their industry-specific expertise and underwriting standards to best measure a borrower’s income. 

In total, three loan options — termed new, priority, and expanded — will be available for businesses.

Additionally, businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, compared to the initial program terms, which were for companies with up to 10,000 employees and $2.5 billion in revenue. 


The minimum loan size for two of the options was also lowered to $500,000 from $1 million. With these changes, the program will now offer more options to a wider set of eligible small and medium-size businesses.

The bank added that it was evaluating “a separate approach” to meet the “unique needs” of non-profit groups.

A+
a-

Economy

March 3, 2023
by Dan McCue
Proximity to Large-Scale PV Projects Can Adversely Affect Home Prices

BERKELEY, Calif. — An analysis of the impact of construction of large-scale solar energy projects on nearby residential home values... Read More

BERKELEY, Calif. — An analysis of the impact of construction of large-scale solar energy projects on nearby residential home values found the decline in property values varied significantly by state, but averaged out to a home sale price reduction of about 1.5% for homes within 0.5... Read More

February 28, 2023
by Dan McCue
Commerce Dept. Rolls Out First CHIPS Funding

WASHINGTON — The Commerce Department on Tuesday announced the availability of the first tranche of a total $50 billion in... Read More

WASHINGTON — The Commerce Department on Tuesday announced the availability of the first tranche of a total $50 billion in funding intended to grow and revitalize the nation’s homegrown semiconductor industry. The first funding opportunity seeks applications for projects to construct, expand or modernize commercial facilities... Read More

Survey: Business Economists Push Back US Recession Forecasts

WASHINGTON (AP) — A majority of the nation’s business economists expect a U.S. recession to begin later this year than... Read More

WASHINGTON (AP) — A majority of the nation’s business economists expect a U.S. recession to begin later this year than they had previously forecast, after a series of reports have pointed to a surprisingly resilient economy despite steadily higher interest rates. Fifty-eight percent of 48 economists who responded... Read More

February 24, 2023
by Dan McCue
Vilsack Sees Next Farm Bill as Opportunity to Diversify Ag Sector

ARLINGTON, Va. — U.S. Agriculture Secretary Tom Vilsack urged Congress on Thursday to use the upcoming farm bill reauthorization as... Read More

ARLINGTON, Va. — U.S. Agriculture Secretary Tom Vilsack urged Congress on Thursday to use the upcoming farm bill reauthorization as an opportunity to encourage America’s farmers to diversify and “create multiple profit centers” in their farming operations. Speaking at the U.S. Department of Agriculture’s 99th annual... Read More

Retail Sales Jump as Americans Defy Inflation and Rate Hikes

WASHINGTON (AP) — America's consumers rebounded last month from a weak holiday shopping season by boosting their spending at stores and restaurants... Read More

WASHINGTON (AP) — America's consumers rebounded last month from a weak holiday shopping season by boosting their spending at stores and restaurants at the fastest pace in nearly two years, underscoring the economy's resilience in the face of higher prices and multiple interest rate hikes by the Federal Reserve.... Read More

January 30, 2023
by Dan McCue
‘Building Resilient Communities’ Gives Local Concerns a Voice in DC

WASHINGTON — What consumes those inside the beltway and in mainstream media doesn’t always reflect the realities of mainstream Americans... Read More

WASHINGTON — What consumes those inside the beltway and in mainstream media doesn’t always reflect the realities of mainstream Americans or the communities in which they live. That was the consistent theme that emerged from last week’s “Building Resilient Communities” forum. Hosted by The Well News... Read More

News From The Well
scroll top