The Federal Reserve Board adjusted the terms of the Main Street Lending Program (MSLP) in an effort to increase access for small businesses as revenue shortfalls continue.
“The Main Street Lending Program supports lending to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the COVID-19 pandemic but lack access to credit on reasonable terms,” the Federal Reserve stated in a release. “To allow borrowers time to recover from the pandemic, the program offers several five-year loan options, with deferred principal and interest payments for qualified businesses and nonprofits.”
Initially, the program had a loan threshold of $1 million, but this minimum has since been lowered twice. This third most recent adjustment puts the loan threshold at $100,000 in hopes these lower amounts will encourage smaller businesses to apply. Fees have also been adjusted to encourage the provision of smaller loans.
“The board and Department of the Treasury also issued a new frequently asked question clarifying that Paycheck Protection Program loans of up to $2 million may be excluded for purposes of determining the maximum loan size under the Main Street Lending Program, if certain requirements are met, which should also help smaller businesses access Main Street loans,” the Federal Reserve stated.
The Treasury Department has provided $75 billion in equity under the CARES Act for the MSLP. To date, the program has issued almost 400 loans totaling $3.7 billion.