COVID-19: Federal Reserve expands reach of ‘Main Street’ emergency lending programs for midsized businesses

Federal Reserve adds third loan facility, increasing size of firms that can participate and reducing minimum loan size to $500,000; ‘evaluating separate approach’ for nonprofits

On April 30, the Federal Reserve Board of Governors announced that in response to public comments, it is expanding the terms and qualifications for its still-forthcoming “Main Street” emergency lending programs for midsized businesses. The changes will allow larger firms to participate, including companies with up to 15,000 employees or $5 billion in annual revenues (up from the previously announced thresholds of 10,000 workers and $2.5 billion in revenue), and the programs’ minimum loan size will be $500,000, down from the previous $1 million, among other changes.

The three Federal Reserve lending programs in question, which will have a combined size of $600 billion, are called the Main Street New Loan Facility, the Main Street Priority Loan Facility and the Main Street Expanded Loan Facility. New term sheets for the programs, as well as a 19-page Frequently Asked Questions (FAQ) document, are posted with the announcement.

The Main Street Lending facilities are still not operational, but the Federal Reserve said “a start date for the program will be announced soon.” Notably, the Federal Reserve also noted public sentiment in favor of allowing nonprofit organizations to participate in the programs. While not announcing anything specific in that regard, the Federal Reserve’s statement said, “The Board recognizes the critical role that nonprofit organizations play throughout the economy and is evaluating a separate approach to meet their unique need.”

The Main Street Lending programs allow businesses to seek loans of up to four-year terms from banks at below-market rates. The loans are not forgivable, but payments can be deferred until the second year. The central bank’s initial proposal for the Main Street Lending programs included an option for new debt and another for existing loans, under which banks will be required to retain 5% of the loan risk on their own books and sell the rest to the Federal Reserve. The current announcement added a third choice for firms with higher debt loads, under which banks will be required to retain 15% of the loans. The Federal Reserve said the changes will “offer more options to a wider set of eligible small and medium-size businesses.”

The Federal Reserve’s statement included the table below outlining the new terms for the three Main Street lending programs:


The terms sheets for the three facilities say that a participating company “should make commercially reasonable efforts to maintain its payroll and retain its employees during the time” the loan is outstanding.

For more information, visit the Federal Reserve website.



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