The program, targeted at companies that were in good shape before the pandemic but may now need financing to retain workers and fund operations, will offer up to $600 billion in loans through participating financial institutions to U.S. businesses with up to 15,000 employees or with revenues up to $5 billion.
Lenders must register using the lender portal and are encouraged by the Fed to begin making program loans “immediately.”
Administered by the Boston Fed, the program aims to offer credit to companies that may be too large to qualify for help from the Paycheck Protection Program, which targets businesses with fewer than 500 employees. Unlike the PPP, which was established by Congress in late March and offers loans that can be converted to grants if businesses meet certain requirements, the loans offered by the Main Street program must be repaid.
It has taken nearly three months for the Fed to design, build and launch a program to extend credit to companies in all walks of the economy, a huge departure from its role as a lender to the banking sector.
Fed officials adjusted the Main Street program twice by expanding the range of loan sizes to make it available to more companies that need help keeping workers on staff. It also extended the loans to five years, with payments deferred for the first two years, to better help businesses struggling because of the crisis.
“Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery,” Fed Chair Jerome Powell said in a statement last week after the most recent adjustment.
The central bank said it will be transparent about the lenders and borrowers participating in the Main Street program, reporting the names of lenders and borrowers, the amounts borrowed and interest rates charged, along with other details. Companies that borrow through the program will also be subject to limits on executive compensation, stock buybacks and dividend payments.