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Main Street Lending Program Expanded to Reach More Small and Mid-Sized Businesses

June 9, 2020

Yesterday, the Federal Reserve Board released important changes to the Main Street Lending Program. These changes expand the Program to make it possible for small and medium-sized businesses to participate.

In short, the newly-issued changes:

    • Both lower the minimum amount of the loans and increase the maximum amount of the loans;
    • Extend the term option from 4 years to 5 years;
    • Extend the principal repayment schedule to begin after 2 years (from 1 year); and,
    • Provides that the Federal Reserve Bank's loan participation is raised to 95% (by purchase of every loan submitted to the Main Street Lending Program) once all documentation has been successfully completed, and comply with the Program requirements.

These changes even provide for loans originated under the previous Program requirements IF funded before June 10, 2020.

Along with the new expansion is the guidance that "the form participation agreement and other legal forms will be updated to align with the changes announced [yesterday]."

Included in the Press Release of the Federal Reserve Bank is an assurance to the nonprofit community:

"Nonprofit organizations play a critical role throughout the economy, and the Board is working to establish a program soon for these organizations."

The expansion of the Program was unanimously approved by vote of the Board of Governors of the Federal Reserve System. Lenders "are encouraged to begin making Main Street loans immediately" upon successfully registering for the Program.

The full version of the Federal Reserve Board's Press Release is linked here.