There was some potential good news out of Washington, D.C. on Monday as the Federal Reserve announced it will expand the Main Street Lending Program, which is to launch soon.
Specifically, the U.S. central bank said the minimum loan of the program will be lowered to $250,000, from its initial low-water mark of $500,000.
Other Main Street Lending program adjustments include:
- An increase in the maximum that can be borrowed by small- and medium-sized businesses.
- An expansion of the loan terms to five years, up one year.
- A repayment period for all loans for up to two years, rather than one year.
- Banks will now take on 95% of Main Street loan risk, up from 85%, to incentivize lenders to offer the credit.
The Main Street Lending Program is designed to help businesses that are too big to tap the Paycheck Protection Program, but too small to access other avenues of relief offered by the central bank. Companies that were on sound financial footing prior to the COVID-19 crisis and only damaged by the virus outbreak can access the program.
Businesses with up to 15,000 employees and $5 billion in revenue can apply for financing through the program once the launch date is set.
For more information on the Main Street Lending Program, visit here.