The Federal Reserve Bank has finally opened its highly anticipated lending program for small and medium-sized businesses.
Using $75 billion provided by Congress through the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, the Fed announced in April that it would lend up to $600 billion through the Main Street Lending Program (MSLP) to provide relief to businesses struggling during the coronavirus crisis. On Monday, the Federal Reserve Bank of Boston opened for banks to register as lenders within the program.
“The Main Street Lending Program is designed to help credit flow to small and medium-sized businesses that were in sound financial condition prior to the COVID-19 pandemic but now face cash flow interruptions,” the Federal Reserve Bank of Boston said in a statement.
Eligible businesses can have as many as 15,000 employees or up to $5 billion in annual revenues. Loans will range from $250,000 to $300 million, with five-year terms and floating interest rates. No interest is due in the first year, and no principal is due for two years.
The Federal Reserve will purchase 95% of the loans, with the goal of reducing risk to enable lenders to make more loans.