On October 30, 2020, the Federal Reserve Board announced changes to the Main Street Lending Program to benefit a wider range of people. Previously reserved for larger businesses and government organizations struggling financially due to COVID-19, the Main Street Lending Program now offers federal loans to non-profits and smaller businesses as well. This is just one of several changes the Federal Reserve made to the Main Street Lending Program in recent weeks.
Other Changes Made by the Federal Reserve Board
One of the most significant changes to the Main Street Lending Program for small business owners is that the Federal Reserve has reduced the minimum loan amount from $250,000 to $100,000. This change is thanks in large part to small business owners. Thousands of them let the Federal Reserve know that they needed help but were not in a position to borrow a quarter of a million dollars.
The Federal Reserve, along with the United States Treasury, clarified several points of confusion with the Paycheck Protection Program back in October. Business owners who apply for a federal loan under both the Paycheck Protection Program and the Mainstreet Lending Program can exclude up to $2 million dollars from the first program to qualify for the second program. While some or all borrowed funds from the Paycheck Protection Program are forgivable, this does not apply to the Main Street Lending Program. The interest rate is typically higher with the second program as well.
What Else Do You Need to Know About the Main Street Lending Program?
Established by the Federal Reserve Board in April 2020 as a quick response to the impact of the coronavirus pandemic on business owners, the Main Street Lending Program set aside $2.3 trillion dollars to provide aid for business owners. The original Main Street Lending Program guidelines stated that this federal loan was specifically for companies based in the United States with revenue of $2.5 million or less in 2019.
The intent of the Federal Reserve was to meet the needs of businesses too large to apply for assistance under the Paycheck Protection Program. That program, operated jointly by United States Treasury and the Small Business Association, offered forgivable loans to business applicants who met certain qualifications. One of the most prominent requirements is that companies have 500 employees or less.
The Main Street Lending Program increased its budget when it received $75 billion dollars from Congress. The funding came from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As part of the CARES Act, the Main Street Lending Program will purchase 95 percent of every new loan that meets the program’s documentation and eligibility requirements.
Contact Juvo Business Group for Additional Small Business Resources
With more than 30 years of company leadership in both the B2C and B2B communities, Jody of Juvo Business Group can help you formulate a business recovery plan due to COVID-19. One of the many things he can help you with is determining your eligibility for federal aid to rebuild your business. We invite you to request an appointment from Jody today.