Fed adjusts terms of Main Street Lending Program

November 2, 2020

The Federal Reserve announced (Off-site) it has adjusted the terms of the Main Street Lending Program, which assists lenders in meeting credit needs of businesses and nonprofits given the challenges of the pandemic:

  • The minimum loan size for three Main Street facilities has been reduced from $250,000 to $100,000, and the fee structure has been adjusted to encourage the provision of these smaller loans.
  • Also, new guidance clarifies that Paycheck Protection Program loans of up to $2 million may be excluded for purposes of determining the maximum loan size under the Main Street Lending Program, if certain requirements are met, which should also help smaller businesses access Main Street loans.

In the Main Street Lending Program, interested borrowers (small- and medium-sized for-profit businesses and nonprofit organizations) work with an eligible lender to determine if they meet the program requirements as well as the lender’s own underwriting standards. The lender will determine approval for a loan. The Fed will participate in the lending by purchasing a 95% interest in the loan, and the lender retains 5%.

To allow borrowers time to recover from the pandemic, the program offers several five-year loan options, with deferred principal and interest payments for qualified businesses and nonprofits. Loan documents reflecting the new terms can be found on the Main Street Lending Program Forms and Agreements (Off-site) page.

We encourage all eligible financial institutions to explore this program’s potential to help them serve the businesses and organizations in their markets that employ millions of workers and are facing continued revenue shortfalls due to the pandemic.

The program was established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the CARES Act.

Visit www.bostonfed.org/mslp (Off-site) to find program information, including frequently asked questions, and to subscribe for e-mail updates. Inquiries about the program can be emailed to MSLP@bos.frb.org.