Fed Eases Terms of Main Street Lending Program to Help More Small Businesses


The Federal Reserve is altering the guidelines of its Main Street Loaning Program to assist smaller sized companies that have been having a hard time to get by while waiting for extra stimulus from Congress.

The Fed on Friday announced it would issue loans as low as $100,000 and lower the fees for the loans. Previously the minimum quantity it would provide was $250,000.

Businesses have been pushing for higher access to the Fed program, stating they needed money that wasn’t readily available from banks.

“Banks are not in the business of lending cash to services that are stopping working,” stated CEO David Kong, CEO of Best Western, one of the business executives who wrote a letter calling for changes to the Main Street program. “Little and medium-sized businesses are struggling and they can’t get aid.”

The Main Street Financing Program is designed to support little and medium-sized organizations and nonprofit organizations that were in sound financial condition prior to the Covid-19 pandemic and now do not have access to credit on reasonable terms.

To date, the program has made nearly 400 loans for a total of $3.7 billion, about $9 million per loan typically.

Unlike the Income Defense Program authorized by Congress, which has arrangements for those loans to be forgiven if the cash goes to keep employees on personnel, loans from the Main Street Loaning Program are required to be paid back. However, it does offer borrowers time to recover from the pandemic with the deferred principal and interest payments.

Fed chair cautions of economic disaster if America can’t manage the coronavirus
Fed Chair Jerome Powell, who has been advising Congress to make more stimulus offered to support the US economy, stated at an interview last month he was aiming to change the regards to the program but that there were legal restrictions as to what the Fed is enabled to do.

“If you take a look at the law … it’s very clear that we are to make loans just to solvent debtors,” he stated at that time. “Having stated that we’re, we’re continuing to work to enhance Main Street, to make it more broadly available– make it practically to any company that requires it and that can service a loan.”

Millionaires’ Financial Decisions Are Different in a Few Surprising Ways, Study Finds

Previous article

MGM Stock Off, Analyst Comment Mixed After Earnings

Next article

You may also like


Comments are closed.

More in Investing