An annual review of the Federal Reserve’s Main Street Lending Program — created with other programs to ensure credit availability amid the COVID-19 pandemic — has seen 70% of the 1,830 loans made fully repaid, with 16% generating losses and about 14% remaining outstanding, the Government Accountability Office (GAO) reported Wednesday.
Of the 13 lending facilities created by the Fed under the 2020 Coronavirus Aid, Relief, and Economic Security Act — or CARES Act — were five comprising the Main Street Lending Program, targeted to midsize businesses and nonprofits. This program, the focus of this review, is the only one that still has loans outstanding, the June 17 report shows.
The GAO said that as of this January, three of the five Main Street Lending Program facilities continued to hold outstanding loans totaling about $672 million. These three were among the nine that received funds appropriated through the CARES Act (section 4003), the GAO said.
Of the 1,830 loans made, 70%, or 1,277 loans, were fully repaid as of Jan. 5. Another 30%, it said, had experienced or were at risk of loss and nearly 14% (251 loans) were still outstanding as of Jan. 5, though they should have closed by then. It said 16% resulted in losses to the program, with $1.3 billion in charged-off loan amounts and $1.4 billion in authorized loan amounts sold back to their lenders at a net loss.
It said the Federal Reserve plans to monitor and report on the status of the facilities until they no longer hold outstanding assets or loans.
The GAO found also that the Fed’s plans for ongoing monitoring of the facilities “are generally aligned with federal internal control standards.”
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