The Federal Reserve expanded the Main Street Lending Program on Monday, making it more accessible to small and medium-size businesses, while also offering a wider range of loan amounts with more flexible payback terms. Previously, the $600 billion program, which is part of the CARES Act, offered loan terms that deterred many small and midsize businesses. Here’s what you need to know:
Who is eligible? Companies with under 15,000 employees, among other qualifications. Companies that have accepted PPP loans are eligible. (Note that the Federal Reserve Board will soon offer a separate loan program for non-profit organizations.)
What has changed?
- The loan amounts are now expanded, as low as $250,000 (down from $500,000) and as high as $300 million (up from $200 million).
- The terms are more flexible, up to five years (from four), with no principal payments for two years (up from one), with deferred interest payments deferred for one year (set at LIBOR +3%) .
Are these loans forgivable? No.
Why would my company want one? They are much more flexible than other loan programs.
Is registration actually open yet? No. This detail has been a point of widespread complaint. The Federal Reserve says it expects the program to be “open for lender registration soon and to be actively buying loans shortly afterwards.”
What’s interesting about the lending program? Unlike other loan programs in the CARES Act, this program loans money directly from the Fed to businesses.
Where’s the fine print? Here.