The long-promised Main Street Lending Program (MSLP) of the Federal Reserve is now fully operational and ready to purchase eligible loan participations by registered lenders, the Boston arm of the central bank said Monday.
The Federal Reserve Bank of Boston said the Fed “encourages lenders to begin submitting qualifying loans.”
The Boston Fed also said it intends to publish “in the coming days” a state-by-state listing of lenders accepting new business customers under the MSLP and electing to be listed.
The program, established by the Fed in response to the financial impact of the coronavirus crisis and administered by the Boston Fed, offers five-year loans to help credit flow to small- and medium-sized businesses that were in sound financial condition prior to the COVID-19 pandemic. Under the program, principal payments are deferred for two years, and interest payments deferred for one year. The Fed provides 95% of the loan and the financial institution provides 5%; the financial institutions will service the loans.
“This is an important milestone for the Main Street program,” said Boston Fed President Eric Rosengren. “Given the pandemic’s shock to the economy, and its uncertain duration, support for businesses and their employees through bank lending is critical.”
The Boston Fed said terms of the program require lenders to assess a borrower for a MSLP loan based on meeting the terms of the program and also the lenders’ own underwriting standards, as part of evaluating financial condition and creditworthiness. Lenders’ loan approvals are contingent on those factors, the bank said.