Changes intended to expand accessibility to its the Main Street Lending Program (MSLP), expected to open for registration soon, were announced Monday by the Federal Reserve Board, which said the changes will make the program available to more small and medium-size businesses.
The Fed lowered the MSLP minimum loan amount, raised the maximum loan limit, adjusted the principal repayment schedule to begin after two years, and extended the term to five years. The Fed said it expects the MSLP program to be open for lender registration soon and to be actively buying loans shortly afterwards.
The Fed said it has extensively sought feedback and revised the Main Street program accordingly.” Changes include:
- Lowering the minimum loan size for certain loans to $250,000 from $500,000;
- Increasing the maximum loan size for all facilities in the program;
- Increasing the term of each loan option to five years, from four years;
- Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and
- Raising the Reserve Bank’s participation to 95% for all loans.
Once they have successfully registered for the program, lenders are encouraged to begin making MSLP loans immediately, the Fed said. The program intends to purchase 95% of each eligible loan that is submitted to the program, provided that the required documentation is complete and the transactions are consistent with the relevant Main Street facility’s requirements. The program will also accept loans that were originated under the previously announced terms, if funded before June 10, 2020.
The Fed Board is also working to establish a program for nonprofit organizations soon, the central bank said.