- Federal Reserve announced $600B lending initiative for mid-sized businesses
- Initiative offering 4-year loans to businesses with up to 10K workers and revenues less than $2.5B/year
- Loan terms permit principal and interest payments allow deferrals for 1 year
The Main Street Lending Program, designed to assist mid-sized businesses (up to 10K workers and less than $2.5B in revenues), comes through efforts of the Federal Reserve. Jerome Powell, the Fed chair, said, “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
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Applications from mid-sized businesses for The Main Street Lending Programs are to be presented to and handled by the country’s top banks.
On the same day The Main Street Lending Program was announced by the Fed, the US Treasury Department’s head, Steven Mnuchin, reiterated that “money will be here” for small businesses. Treasury has asked Congress for additional funding for its loan programs but Congress is stymied by different requests among constituent bases. More money will be forthcoming…when is the question.
The problem for all of these signed and forthcoming loan programs under the umbrella of the Coronavirus Aid, Relief and Economic Security (CARES) Act has been that banks, nonbanks and unemployment offices haven’t been delivering requested funds “in a timely fashion” as they’ve been completely overwhelmed by the volume of demand.
With nearly 17M people requesting unemployment insurance benefits in just three weeks and over 3M businesses applying for loans and grants under the auspices of the Paycheck Protection Plan in its first operational week alone, applicants have not yet received financial assistance. Yes, some money is there, just not enough of it to meet demand. And no, commensurate staffing is not there to see that the available money is delivered “in time” to make a difference.
Thanks to ABCNews.