Fed invites lenders to sign up for Main Street Lending Program
WASHINGTON — Financial institutions can now register to participate in the Federal Reserve's Main Street Lending Program, the Federal Reserve Bank of Boston said Monday.
The program, aimed at helping small and medium-sized businesses stay afloat during the coronavirus pandemic, will make loans available through third-party banks to companies with up to 15,000 employees or up to $5 billion in annual revenue.
Lenders interested in participating “are encouraged to begin making Main Street program loans immediately,” the Boston Fed, which is administering the program, said in a press release.
Registration is available through the program’s lender portal, where banks will be required to submit certain registration forms and agreements. The Main Street Lending Program will start purchasing participations in loans made through the program via the lender portal “soon,” the Boston Fed said.
The Fed also on Monday asked for public feedback on a proposal to extend the Main Street Lending Program to nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic. Under the proposal, the Fed would add a “nonprofit new loan facility” and a “nonprofit expanded loan facility.”
The Fed is proposing that the loan terms for nonprofits be identical to the existing loan terms for eligible businesses, and that nonprofits would be able to obtain a loan through the program if they had at least 50 employees and up to 15,000 employees.
Eligible nonprofits would also have to have been operational for at least five years and have no more than $3 billion in endowments. The Fed is also suggesting that it implement financial thresholds in the proposed nonprofit loan facility based on an organization’s operating performance, liquidity and ability to repay debt.
“Nonprofit organizations are critical parts of our economy, employing millions of people, providing essential services to communities, and supporting innovation and the development of a highly skilled workforce,” said Fed Chair Jerome Powell in a statement. “Nonprofits provide vital services across the country and we are working to help them through this difficult time.”
Just last week the Fed announced it had made a number of tweaks to the program in order to attract more interest from both potential lenders and borrowers, including increasing the central bank's stake in all loans made through the program to 95%. The Fed also lowered the minimum loan amount from $500,000 to $250,000 and increased the maximum loan size for each of the three Main Street Lending Program facilities.
Additionally, the Fed extended the loan terms from four to five years, lengthened the prepayment period and will now allow borrowers to delay principal payments for two years instead of one.