FED Expands Main Street Lending Program for SMEs to Ease COVID Impact
FED expanded its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support. The key changes involve lowering the minimum loan amount for certain loans to USD 250,000, increasing the maximum loan limit for all facilities, adjusting the principal repayment schedule to begin after two years, and extending the term to five years, thus providing borrowers with greater flexibility in repaying the loans. FED expects the program to be open for lender registration soon and to be actively buying loans shortly afterward.
The Main Street Lending Program was established with the approval of the Treasury Secretary and with USD 75 billion in equity provided by the Treasury Department from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The program consists of Main Street Expanded Loan Facility, the Main Street New Loan Facility, and the Main Street Priority Loan Facility, the terms sheets for which have also been published. FED extensively sought feedback and revised the Main Street Program accordingly. 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 requirements of the relevant Main Street facility. The program will also accept loans that were originated under the previously announced terms, if funded before June 10, 2020. Non-profit organizations also play a critical role throughout the economy; therefore, FED is working to establish a program for these organizations as well.
Related Link: Press Release
Keywords: Americas, US, Banking, COVID-19, Credit Risk, CARES Act, SME, Loan Repayment, Main Street Lending Program, FED
Featured Experts
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Related Articles
EBA Updates List of Validation Rules for Reporting by Banks
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS Advocates Environmental Risk Analysis for Financial Sector
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.
MAS Issues Guidelines to Promote Senior Management Accountability
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA Formalizes Capital Treatment and Reporting of COVID-19 Loans
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
SRB Chair Discusses Path to Harmonized Liquidation Regime for Banks
SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.
FSB Workshop Discusses Preliminary Findings of Too-Big-To-Fail Reforms
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB Updates List of Supervised Entities in EU in September 2020
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI Identifies Focus Areas to Strengthen Third-Party Risk Management
OSFI published the key findings of a study on third-party risk management.
FSB Extends Implementation Timeline for Framework on SFTs
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.
