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-
  • Coronavirus
  • Economy
  • Federal Reserve
  • Main Street Lending Program
  • small business
  • stimulus
  • In The News

    Health

    Voting

    Economy

    Biden to Convene New Supply Chain Council, Announce 30 Steps to Strengthen US Logistics

    WASHINGTON (AP) — President Joe Biden on Monday will convene the first meeting of his supply chain resilience council, using the event... Read More

    WASHINGTON (AP) — President Joe Biden on Monday will convene the first meeting of his supply chain resilience council, using the event to announce 30 actions to improve access to medicine and needed economic data and other programs tied to the production and shipment of goods. “We’re determined... Read More

    Business Group Estimates Several Hundred Thousand Clean Energy Jobs in EV, Storage and Solar

    A nonpartisan business group that advocates for clean energy estimates that 403,000 jobs will be created by the 210 major... Read More

    A nonpartisan business group that advocates for clean energy estimates that 403,000 jobs will be created by the 210 major energy projects announced since the Inflation Reduction Act took effect in mid-2022. At least $86 billion in investments have been announced, with the biggest job gains in... Read More

    US Consumers Feeling Slightly Less Confident in October

    WASHINGTON (AP) — American consumers are feeling increasingly less confident these days as fears of an oncoming recession remain elevated.... Read More

    WASHINGTON (AP) — American consumers are feeling increasingly less confident these days as fears of an oncoming recession remain elevated. The Conference Board, a business research group, said Tuesday that its consumer confidence index fell to 102.6 from 104.3 in September. The index measures both Americans’... Read More

    UAW Strikes at General Motors SUV Plant in Texas

    DETROIT (AP) — The United Auto Workers union turned up the heat on General Motors as 5,000 workers walked off... Read More

    DETROIT (AP) — The United Auto Workers union turned up the heat on General Motors as 5,000 workers walked off their jobs Tuesday at a highly profitable SUV factory in Arlington, Texas. The move comes just a day after the union went on strike at a Stellantis... Read More

    Stock Market Today: Wall Street Claws Back From Morning Loss to Mostly Rise

    NEW YORK (AP) — Wall Street is drifting Tuesday following the latest signal that the U.S. economy remains solid, though... Read More

    NEW YORK (AP) — Wall Street is drifting Tuesday following the latest signal that the U.S. economy remains solid, though perhaps too strong for the Federal Reserve’s liking. The S&P 500 was 0.2% higher in midday trading after erasing an early drop. The Dow Jones Industrial... Read More

    September 26, 2023
    by Dan McCue
    Vilsack Warns Farmers, Children Will Feel Shutdown’s Effect Almost Immediately

    WASHINGTON — With a partial federal shutdown growing ever more likely come midnight Saturday, the Biden administration on Monday began... Read More

    WASHINGTON — With a partial federal shutdown growing ever more likely come midnight Saturday, the Biden administration on Monday began underscoring the consequences of Congress not quickly taking steps to avert it. At Monday afternoon’s press briefing at the White House, Agriculture Secretary Tom Vilsack painted... Read More

    News From The Well
    scroll top