MNI POLICY: Fed Expands Scope of Main Street Program -Text

     WASHINGTON (MNI) - The Fed on Monday expanded the scope of its Main Street

lending facility. Here's the text of the announcement. 

     The Federal Reserve Board on Monday expanded its Main Street Lending

Program to allow more small and medium-sized businesses to be able to receive

support. The Board lowered the minimum loan amount, raised the maximum loan

limit, adjusted the principal repayment schedule to begin after two years, and

extended the term to five years, providing borrowers with greater flexibility in

repaying the loans. The Board expects the Main Street program to be open for

lender registration soon and to be actively buying loans shortly afterwards. 

     "Supporting small and mid-sized businesses so they are ready to reopen and

rehire workers will help foster a broad-based economic recovery," Federal

Reserve Chair Jerome H. Powell said. "I am confident the changes we are making

will improve the ability of the Main Street Lending Program to support

employment during this difficult period." 

     Small and medium-sized businesses are a vital part of the economy and

employ tens of millions of people, and, because their needs vary widely, the

Board has extensively sought feedback and revised the Main Street program

accordingly. 

     The changes include: 

     * Lowering the minimum loan size for certain loans to $250,000 from

$500,000; 

     * Increasing the maximum loan size for all facilities; 

     * Increasing the term of each loan option to five years, from four years;

     * Extending the repayment period for all loans by delaying principal

payments for two years, rather than one; and 

     * Raising the Reserve Bank's participation to 95% for all loans. The chart

below has additional details on the changes. 

     Once they have successfully registered for the program, lenders are

encouraged to begin making Main Street loans immediately. The Main Street

Lending Program intends to purchase 95% of each eligible loan that is submitted

to the program, provided that the required documentation is complete and the

transactions are consistent with the relevant Main Street facility's

requirements. The Main Street Lending Program will also accept loans that were

originated under the previously announced terms, if funded before June 10, 2020.

     Nonprofit organizations play a critical role throughout the economy, and

the Board is working to establish a program soon for these organizations. 

     The Main Street Lending Program was established with the approval of the

Treasury Secretary and with $75 billion in equity provided by the Treasury

Department from the CARES Act. Additional frequently asked questions and answers

for lenders and borrowers are also available. The form participation agreement

and other legal forms will be updated to align with the changes announced today.

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