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Federal Reserve widens Main Street Loan Program to reach more businesses

Federal Reserve Chairman Jerome Powell in March.
(Jacquelyn Martin / Associated Press)

The Federal Reserve is expanding the scope of its Main Street Lending Program to help more borrowers become eligible as it seeks to keep credit flowing to the U.S. economy during the coronavirus pandemic.

The central bank said Thursday that businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, in effect doubling the revenue limit from previous guidelines and raising the employee limit by 5,000.

The move follows calls from lawmakers and the business community — including heavy lobbying from key industries that have been hammered by the economic lockdown — for the program to be widened after the Fed initially announced terms of who would qualify.

The Fed said a start date for the Main Street program would be announced soon.

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The minimum loan size was lowered to $500,000 from $1 million, and a third loan option for more leveraged companies was added. Under that option, lenders would retain a 15% share on loans that when added to existing debt do not exceed six times earnings adjusted for interest, taxes and depreciation.

Treasury Secretary Steven T. Mnuchin said last week that he was considering an additional lending facility for troubled energy companies. The adjustments on the Fed facility might encompass some of those firms. The Fed’s reading of its emergency lending authority has been that it doesn’t permit the central bank to erect a facility to support a specific industry.

The central bank has announced nine emergency loan programs to help keep credit flowing during the pandemic, of which four are up and running.

Despite early glitches and overwhelming demand, the Small Business Administration processed more than 100,000 Paycheck Protection Program loans by more than 4,000 lenders.
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