As businesses begin the process of reopening their doors after the COVID-19 shutdown, many have considered turning to the Federal Reserve’s Main Street Lending Program for aid. Announced on March 23, the Program’s goal is to help businesses weather the pandemic and the subsequent economic effects. However, recent changes to the Program may make it even more attractive and useful to business owners.1
A Flexible Fed. Just as America has adapted to the challenges of the pandemic, so too has the Federal Reserve. Recently, the Fed expanded the Main Street Lending Program’s scope by lowering the minimum loan size to $250,000, extending loan terms to five years, and raising the maximum loan size.2
New Loan Types. It’s important to note that these loans are being offered by bank lenders, not the Fed itself. To sweeten the deal further, the Fed and the U.S. Treasury will shoulder the majority of risk associated with lending, making lenders more likely to approve loans for those who need it most. The Fed will offer three different types of loans with new maximum amounts:
- New loans – $35 million maximum
- Priority loans – $50 million maximum
- Expanded loans – $300 million maximum3
For some business owners, the Main Street Lending program may be a low-risk, “stop-gap” measure to help with any sudden dips in consumer spending. Let me know if you would like to chat about how this could help you or someone you know.
This material was prepared by MarketingPro, Inc. for use by Starlight Portfolios.
Citations.
1 – Federalreserve.gov, 2020
2 – Federalreserve.gov, 2020
3 – Federalreserve.gov, 2020