Fed broadens terms of Main Street lending program, more help for small businesses

Amid dwindling hope for a second stimulus package from Congress, the Federal Reserve has widened the terms of its Main Street lending program to better target support for small businesses. According to the new guidelines, the minimum loan size for three Main Street vehicles available to for-profit and non-profit borrowers has been reduced from $250,000 to $100,000. Corresponding fees have also been adjusted to encourage loan dispersal. A new FAQ has also been added clarifying that Paycheck Protection Program (PPP) loans of up to $2 million may be excluded for purposes of determining the maximum loan size under the Main Street lending program.

The program is designed to help credit flow to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 crisis, but now need loans to help maintain their operations until they have recovered from, or adapted to, the impacts of the pandemic. The loans are not grants, and cannot be forgiven.

Thus far, the Main Street lending program has made only 400 loans totaling $3.7 billion – far below the $600 billion in total funding the Federal Reserve has said it is willing to lend. With the new guidelines in place, it is hoped that banks will be more willing to make smaller loans to businesses and participation in the program will increase.

Small and medium-sized for profit businesses and nonprofit organizations interested in the program can apply for the loans by contacting an eligible lender. More information for eligible borrowers, including a listing of registered lenders who are accepting new customers and have elected to be listed, can be found on the Federal Reserve Bank of Boston Information for Borrowers website.