As a result of the Coronavirus Aid, Relief & Economic Security (CARES) Act, the Federal Reserve established the Main Street Lending Program (MSLP) to promote lending to a wide variety of small and medium-sized businesses that were in good financial condition before the onset of the COVID-19 pandemic. The MSLP is authorized to provide $600 billion in financing to these businesses to help maintain operations and payroll.
The Boston Federal Reserve, which is taking the lead on the program, recently began releasing additional information, including an FAQ document and lender and borrower information. As of press time, the Federal Reserve is working to create the infrastructure to operationalize the program and it is not yet accepting program applications. It is expected that the program will fully launch in the coming days.
The program offers four-year loans to eligible borrowers—ranging in size from $500,000 to $200 million—with floating rates and principal and interest payments deferred during the first year to assist businesses facing temporary cash flow interruptions. Lending is conducted through eligible lenders. The Federal Reserve does not extend loans directly to borrowers. It should be noted that unlike the Paycheck Protection Program (PPP), Main Street loans are not grants and cannot be forgiven.
Borrowers must meet certain criteria to be eligible for the MSLP. The two most basic are that they must be U.S. businesses established prior to March 13, 2020, and can employ up to 15,000 employees or up to $5 billion in 2019 annual revenue. Eligible borrowers that have received loans under the PPP may also receive Main Street loans.
As the Federal Reserve continues to provide details on the program, the Big “I” will make the most up-to-date government affairs information available on the coronavirus resource page and in the weekly News & Views e-newsletter.
Wyatt Stewart is Big “I” senior director of federal government affairs.