The program is designed to be a lifeline for businesses too big for new emergency programs like the PPP but too small to access capital markets.
Monday that it will expand the terms of its $600 billion yet-to-launch Main Street Lending Program to make it accessible to more companies; the changes come amid widespread concern that the program’s strict terms would discourage cash-strapped borrowers and lenders from participating. ...
Under the new terms, the Fed will lower the minimum loan amount from $500,000 to $250,000, raise the maximum loan amount from $200 million to $300 million and extend the repayment period from four years to five years; borrowers are not obligated to make principal payments for the first two years. The Fed will take on even more risk by increasing the portion of certain loans it buys from banks from 85% to 95%. ” the Fed has faced during the coronavirus recession because of how the central bank must balance loan terms that are strict enough to ensure most companies pay the money back but not so strict that businesses are deterred from participating.
The Fed’s changes come as many complain the program’s interest rates were too high and its repayment periods too short; plus, it’s taken more than two months to get off the ground which means that businesses in crisis may have been forced to seek help elsewhere already. “The general feeling among our members is too late and not enough,” David French, senior vice president of government relations at the National Retail Federation,The Main Street program is open to companies with less than 15,000 people or annual revenue of less than $5 billion last year. Companies that have received Paycheck Protection Program loans are eligible to participate, though unlike PPP loans, Main Street loans will not be forgivable.
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Stanley Druckenmiller said he's been 'humbled' by market comeback, underestimated the Fed
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