WASHINGTON, Oct 31, 2020 (BSS/AFP) – The US Federal Reserve once again expanded its Main Street Lending Program on Friday to make it more accessible to smaller firms and non-profit organizations struggling amid the coronavirus pandemic.
The Fed move offers small comfort to firms seeking help, in the absence of a new relief package from Congress after Democratic legislators failed to break the impasse in talks with the White House.
Many of the features of the $2.2 trillion CARES Act approved have lapsed and the chances of approving a replacement package after the November 3 presidential election are uncertain.
The US central bank lowered the minimum loan amount to $100,000 from the previous $250,000, which in turn was a quarter of the original threshold.
The Fed said the change aimed “to better target support to smaller businesses that employ millions of workers and are facing continued revenue shortfalls due to the pandemic.”
The Fed launched the program in June to aid companies struggling to survive damage from coronavirus shutdowns but too big to benefit from the Paycheck Protection Program.
Through September 30 the Fed had made almost 400 loans totaling $3.7 billion, but less than 10 percent were for amounts under $1 million.
The Main Street program is available to businesses with up to 15,000 employees, or as much as $5 billion in annual revenue, that were solvent before the crisis.
Unlike the Treasury Department’s PPP loans, which turn into grants as long as most of the funds are used to pay workers, the Main Street loans are not forgivable and go to firms that were in sound financial condition before the Covid-19 crisis.
Since the pandemic hit in mid-March, the Fed has rushed out a series of emergency programs to pump liquidity into the US economy amid the severe downturn.