The Federal Reserve announced Monday that it will expand its Main Street lending program, which is set to launch in the coming days, to allow for more companies to participate.
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The U.S. central bank said it is lowering the minimum loan to $250,000 from $500,000 and raising the maximum that can be borrowed by small- and medium-sized businesses. It's also expanding the loan terms to five years and extending the repayment period for all loans for two years, rather than one.
The program is designed to help businesses that are too big to tap the government-backed Paycheck Protection Program, but too small to access other avenues of relief offered by the central bank. Companies that were on sound financial footing pre-crisis and only damaged by the virus outbreak can tap the program.
"Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery," Fed Chairman Jerome Powell said in a statement. "I am confident the changes we are making will improve the ability of the Main Street Lending Program to support employment during this difficult period."
Businesses with up to 15,000 employees and $5 billion in revenue can apply for financing through the program.
The program will be open for registration "soon," the Fed said, and it will start buying loans "shortly afterwards."
"It is very challenging," Powell said of the program at the end of May, "because it's an extraordinarily diverse space. The credit needs of different kinds of companies in different kinds of industries are extraordinarily diverse."
The $2.2. CARES Act signed into law at the end of March provided $454 billion for the Treasury to backstop the various lending programs offered by the Fed.
"This should help support a broad-based economic recovery as the country reopens," Treasury Secretary Steven Mnuchin said in a statement on Tuesday. "Many great American companies that were in sound financial condition have been adversely impacted by the pandemic."