Lender underwriting should look back to a borrower’s pre-pandemic condition and forward to post-pandemic condition, according to revised frequently asked questions (FAQs) addressing the Main Street Lending Program issued Friday by the Federal Reserve.
In a related development, the Fed said that the Federal Reserve Bank of Boston, which administers the lending program, anticipates that the program will begin accepting loans made to multiple co-borrowers when that functionality is deployed next week. In anticipation of that added functionality, the Fed said, the revised FAQs issued Friday for the Main Street program also include details regarding co-borrower loans.
According to the Fed, the FAQs are intended to clarify the agency’s and the Treasury Department’s expectations for the program, which was established by the Fed after the financial shock created in the outbreak of the coronavirus crisis in the U.S.
The Main Street program is intended to support lending to small and medium-sized, for-profit businesses and nonprofit organizations that were in sound financial condition before the COVID-19 pandemic but lack access to credit on reasonable terms. It offers several five-year loan options, with deferred principal and interest payments for qualified businesses and nonprofits to allow borrower’s time to recover from the pandemic
According to the Fed, the revised FAQs were developed in conjunction with the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC).