Rep. Frank Lucas (OK-District 3) released the following statement today after the Federal Reserve Bank of Boston announced on Monday the Main Street Lending Program is fully operational.
The MSLP will support small and mid-sized businesses, and their employees, that were in good financial standing before the pandemic by ensuring credit flows to businesses in need. The goal is to keep these Main Street businesses solvent to help ensure a strong and widespread economic recovery as communities across the country work to reopen.
“Businesses and families across the country are continuing to weather the economic disruptions of the coronavirus, and the Main Street Lending Program’s support through financial lending to small and mid-sized businesses is critical to the health of our local economies,” Lucas said.
“I thank the Federal Reserve for their willingness to expand the Program, furthering Congress’ intent to provide stability for a broad-based economic recovery. While the duration of the pandemic remains uncertain, and as our health care leaders work strenuously towards a vaccine, I hope businesses and banks alike continue to work together to ensure a strong economic recovery for Main Street and our local economies.”
Background information on Main Street Lending Program:
What is the Main Street Lending Program?
• The Main Street Lending program will support small and mid-sized businesses, and their employees, that were in good financial standing before the public health crisis by ensuring credit flows to businesses in need.
• MSLP loans will provide stopgap support to keep our businesses operational and enable consumers to remain active in our economy as communities across the country work to reopen.
• Congress, the Trump Administration and the Fed worked at a breakneck pace to stabilize the markets and the economy early on by rushing relief to businesses through the Paycheck Protection Program and the Federal Reserve’s Corporate Credit Facilities.
Who is eligible to participate in the Main Street Lending Program?
• An eligible borrower:
o Is a business with up to 15,000 employees or up to $5 billion in 2019 annual revenues.
o Is created or organized in the United States or under the laws of the United States.
o Has significant operations in and a majority of its employees based in the United States.
• A borrower must commit to commercially reasonable efforts to maintain payroll and retain workers and must comply with the CARES Act requirements on executive compensation, stock buybacks, dividends and capital distributions.
• Recipients of Paycheck Protection Program loans are eligible for the Main Street Lending Program, provided the other eligibility requirements are met.
Who is eligible to lend through the Main Street Lending Program?
• Eligible lenders include U.S. federally-insured depository institutions (including banks, savings associations, and credit unions), U.S. branches or agencies of foreign banks, U.S. bank holding companies, U.S. savings and loan holding companies, U.S. intermediate holding companies of foreign banking organizations or any U.S. subsidiary of any of the previously listed institutions.
How does the Main Street Lending Program Work?
• Eligible lenders may originate new loans or increase the size of existing loans. The Federal Reserve will then purchase 95% of the loan, providing liquidity to these lenders to continue making loans while also ensuring the lenders retain a small percentage of the risk associated with the loan.
• There are three facilities available:
o The Main Street New Loan Facility will purchase loans originated after April 24, 2020. The minimum loan amount is $250,000, and the maximum loan amount is the lesser of $35 million or four times borrower earnings. The lender will retain 5% of the loan.
o The Main Street Priority Loan Facility will purchase loans originated after April 24, 2020 to borrowers with higher amounts of existing debt. The minimum loan amount is $250,000, and the maximum loan amount is the lesser of $50 million or six times borrower earnings. The lender will retain 5% of the loan.
o The Main Street Expanded Loan Facility will purchase loans originated prior to April 24, 2020. The minimum loan amount is $10 million, and the maximum loan amount is the lesser of $300 million, six times borrower earnings. The lender will retain 5% of the loan.
Visit the Federal Reserve Bank of Boston’s website for additional information and answers to frequently asked questions about the Main Street Lending Program.