Under the Main Street Lending Program, the Federal Reserve will purchase loans from eligible banks with the goal of ensuring that credit flows to small- and mid-sized businesses. The Federal Reserve announced the following changes to the program on June 8, 2020:
- Loan terms have been increased to five years from four years.
- The minimum loan size has been decreased to $250,000 from $500,000 (and from $1 million under the original terms of the program).
- The maximum loan size has been increased.
- The repayment period has been extended by delaying principal payments for two years rather than one.
- The Federal Reserve’s participation has been increased to 95% for all loans (previously 85% for certain loans).
The Federal Reserve’s press release regarding these changes can be found at https://www.federalreserve.gov/newsevents/pressreleases/monetary20200608a.htm.