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Fed’s Main Street Lending Program Adjusted For Greater Small Business Participation June 10, 2020 (0 comments)
Washington, DC—The Federal Reserve’s Main Street business lending program has adjusted its terms to allow for greater participation of small and medium-size businesses. Under new parameters, the minimum loan will now be $250,000, half the amount originally proposed under previous versions of the plan. The maximum amount has been raised to $300 million from the previously announced $200 million.
These changes, along with other modifications, will allow the Fed to get money to a greater number and variety of small and mid-sized businesses hurt by the coronavirus-induced crash and subsequent recession, reports CNBC. The goal is to enable these businesses to reopen and rehire workers, hopefully fostering a rapid economic recovery. Other changes include:
- Extended repayment period from four to five years;
- Delayed [start of] repayment to two years from the original one year;
- Interest delayed for one year;
- Interest will be LIBOR plus 3%;
- Lenders will assume just 5% of the loans, with the Fed holding the rest.
The Fed has “lending but not spending” powers. Backstopped by Treasury money, $75 billion in equity can be used for $600 billion in lending, says CNBC.
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