The Federal Reserve has just announced that a program announced earlier this spring intended to help businesses withstand the COVID-19 economic shutdown is now fully operational.
In a press release issued by the Fed, it is noted that financial institutions across the country hoping to participate in the Main Street Lending Program, “may now submit qualifying loans for the Fed to purchase.”
The Fed additionally announced that it is committed to buying up to “95 percent of each loan submitted.”
The program, which offers around $600 billion for small and medium-sized businesses, is intended to provide support not currently available in the Paycheck Protection Program.
The PPP offers forgivable loans for businesses with five hundred or less employees, while the Main Street Lending Program is available for companies with up to 15,000 employees.
Businesses making as much as $5 billion in annual revenue are also eligible for Main Street loans that can range in size from $250,000 to $300 million.
According to reports, the banking industry’s response to the program, since it was first aired two months ago, has so far been underwhelming. Out of nearly 11,000 federally insured banks and credit unions nationally, only around 300 such institutions have submitted the required paperwork to be a part of the program.
Speaking last month before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell acknowledged that some financial institutions have been less than enthusiastic about the program, particularly given that its terms have changed several times during the development phase.
Trying to make sense out of some of the confusing stipulations, some companies have even wondered whether, in the end, they will be eligible for help under the program.
But, said Powell: “As we have been since the very beginning, we are very open to learning and adapting.”
Powell added that aspects of the Main Street Lending Program may be changed in the near-term future in order to more specifically address the economic needs of companies and businesses.
By Garry Boulard
Get stories like these right to your inbox.