Federal Reserve encourages participation in SBA and Treasury lending programs

Federal Issues Federal Reserve SBA CARES Act Covid-19 Small Business Lending Department of Treasury

On April 6, the Federal Reserve Board (Fed) sent a letter to supervision officers at the Federal Reserve Banks encouraging supervised financial institutions to participate in programs offered by the Small Business Administration and the Treasury Department under the CARES Act. These programs include (i) the Economic Injury Disaster Loan program under Section 7(b) of the Small Business Act, which offers financial aid to small businesses to compensate for economic loss resulting from Covid-19; and (ii) the Paycheck Protection Program, which offers loans—subject to forgiveness pending certain conditions—to incentivize qualified small businesses to retain their employees throughout the Covid-19 pandemic. The Fed also reminded supervised institutions that prudent use of these programs will not receive criticism from examiners.