Federal Reserve expands Main Street Lending Program: More businesses now eligible

Update: On June 8, the Federal Reserve Board announced another expansion of the Main Street Lending Program. Read our alert for details. 

Earlier today, the Federal Reserve Board announced an expansion of its Main Street Lending Program so that more businesses can take advantage of the program, an option for those affected by the COVID-19 pandemic. Key refinements to the program include: 

• Expanding the pool of businesses eligible to borrow
• Lowering the minimum loan size for certain loans to $500,000
• Creating a third loan option with increased risk sharing by lenders for borrowers with greater leverage

When the Main Street Lending Program was initially launched, the Fed announced it would seek input from the public to determine if modifications were needed. In response to the commentary received, the Fed has made the changes highlighted above.

“While the Fed did not specify a starting date for the program, we are encouraged that it has announced the expansion of the scope of the Main Street Lending Program, broadening the pool of eligibility to include bigger businesses and offering a different set of loans,” notes Bob Moss, CohnReznick’s National Director of Governmental Affairs. “It appears the Fed reviewed the public comments seriously and added this flexibility, which will allow more firms access to capital. CohnReznick will continue to monitor for further updates.” 

Jeremy Swan, the firm’s Managing Principal for the Financial Sponsors & Financial Services industry, adds, “The Fed’s expansion of the Main Street Lending Program now extends to private equity with higher revenue and employment thresholds. But this is still subject to affiliate rules as well as further finalizing of the program rules.”   

For additional information on COVID-19 related legislation and tax programs, visit our Coronavirus Resource Center.

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