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On April 9, the Federal Reserve and Treasury Departments announced the establishment of a new program to aid small to medium-sized businesses in need of financial assistance because of COVID-19 (including some mid-sized businesses not eligible for loans under CARES Act loan programs). It’s called the Main Street Lending Program (MSLP). Under the program, the Federal Reserve will purchase up to $ 600 billion in loans. The initial equity investment is being made by the Treasury Department using funds allocated by the CARES Act.
When the terms of the program were first announced, the Federal Reserve indicated that it was seeking feedback from the public on potential refinements. More than 2,200 letters were received. In response, on April 30, the Federal Reserve announced it is expanding the scope and eligibility for the Main Street Lending Program. Although the Federal Reserve has not yet provided all details about the program, including the application process and launch date, below are some of the main points of what has been announced, including the refinements announced on April 30.
The Main Street Lending Program may be an important option for small and mid-size businesses, and especially those mid-size businesses that are not eligible for the loan programs established by the CARES Act. More information about the program, including term sheets for each facility and FAQs, can be obtained from the Federal Reserve’s website here https://www.federalreserve.gov/newsevents/pressreleases/monetary20200430a.htm.
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