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Financial Services Law Insights and Observations

Fed expands Main Street Lending Program

Federal Issues Federal Reserve Covid-19 CARES Act Agency Rule-Making & Guidance Small Business Lending

Federal Issues

On June 8, the Federal Reserve Board (Fed) announced an expansion to its Main Street Lending Program in order to assist more small and medium-sized businesses. The Fed notes that small and medium-sized businesses’ needs “vary widely,” and after seeking feedback, revised the program to, among other things, (i) lower the minimum loan size for certain loans to $250,000 from $500,000; (ii) increase the maximum loan size for all facilities; (iii) increase the term option to five years, from four years; (iv) delay principal payments for two years, rather than one; and (v) raise the purchase rate to 95 percent of each eligible loan. The announcement notes that the Fed expects the program to be open for lender registration “soon” and will be “actively buying loans shortly afterwards.” The program will continue to accept loans that were originated under previous terms if the loans are funded before June 10 (see InfoBytes here on the program’s previous terms).

The Fed’s announcement also contains a chart covering the detailed changes and term sheets for the program’s New Loan Facility, Priority Loan Facility, and Expanded Loan Facility.

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