The Federal Reserve on Friday announced changes to the Main Street Lending Program intended to make financing more readily available to small and medium-size businesses struggling amid a resurgence of coronavirus cases.
The minimum loan size was lowered from $250,000 to $100,000.
The changes come as negotiations over another round of fiscal aid drag on in Congress and as businesses face the prospect of increasing restrictions this winter in the case that the virus continues to spread.
The Fed announced two significant changes to all of its Main Street Lending Program facilities:
- Lowered the minimum loan size from $250,000 to $100,000 for both for-profit and non-profit borrowers
- Updated FAQs clarifying that Paycheck Protection Program loans of up to $2 million may be eligible for exclusion from outstanding debt when determining maximum eligible loan size
The changes are intended to encourage broader participation in the MSLP, which has lagged behind the PPP, another signature lending facility. For example, one segment of loan amounts approved under the PPP — $100,000 to $150,000 — attracted nearly 295,000 loans approved in a little over the four months that the program ran. The MSLP, by contrast, has had roughly 400 loans approved for $3.7 billion since launching in early July.
Now, with $594 billion in total funding left to allocate under the MSLP, the Fed is under pressure to expand participation in the program.
While these changes are beneficial for a sector of the economy that has felt a disproportionate impact from the COVID-19 pandemic, the hope is that these changes are not too little, too late.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.