Main Street Lending Program: Requirements & Documentation
Main Street Lending Program: Requirements & DocumentationUpdated June 9. 2020
On April 9, 2020, the Federal Reserve announced additional actions it will take to provide up to $2.3 trillion in loans to support the U.S. economy. This support was necessary due to the economic hardships brought on by the COVID-19 pandemic and the subsequent contraction of credit availability for both small and medium-sized businesses. Among the actions taken to offer companies liquidity, the Secretary of the Treasury will make a $75 billion equity investment using appropriated funds from Section 4027 of the CARES Act in a special purpose vehicle (SPV) established to implement a Main Street Business Lending Program (“Main Street”).
This SPV will in turn purchase up to $600 billion in total loans for businesses that qualify in order to provide relief via expedited access to capital. This program aims to increase the flow of credit to small and medium-sized businesses that were in good financial standing prior to the COVID-19 crisis and have subsequently suffered a covered loss. For businesses that qualify, Main Street offers three facilities, all of which were authorized by the Federal Reserve Board, with identical eligibility criteria for lenders and borrowers and have similar features (maturity, interest rate, deferral of payment of principal and interest for one year and the ability to prepay without penalty).