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
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