The Federal Reserve Board expanded its Main Street Lending Program on June 8 to allow more small and medium-sized businesses to be able to receive support during the pandemic. The action 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 in repaying the loans. The Main Street program is expected to be open for lender registration soon and to be actively buying loans shortly afterward.
The changes are designed to meet the widely varied needs of small business and include:
- 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.
The chart below has additional details on the changes.
Once they have successfully registered for the program, lenders are encouraged to begin making Main Street loans immediately. The Main Street Lending Program intends to purchase 95% of each eligible loan that is submitted to the program, provided that the required documentation is complete and the transactions are consistent with the relevant Main Street facility’s requirements. The Main Street Lending Program will also accept loans that were originated under the previously announced terms, if funded before June 10.