Federal Reserve Makes $600 Billion In Emergency Loans Available For Small, Medium Sized Businesses
The U.S. Federal Reserve launched its Main Street Lending Program (MSLP) last week. The MSLP program is designed to provide a total of $600 billion in credit to small and mid-sized businesses that were in “good financial standing” before the COVID-19 emergency but are now struggling due to stay-at-home and business closure orders.
Business borrowers must apply for MSLP loans through participating local banks. The Federal Reserve will purchase back 95 percent of loans from eligible lenders.
Loans are available until September 30, 2020. Eligible borrowers include businesses with 15,000 employees or fewer: or businesses with 2019 revenues of $5 billion or less.
Eligible lenders include participating federally insured depository institutions including, banks, credit unions and savings and loans institutions.
Borrowers have 5 years to repay a loan made under the MSLP program. Principal and interest payments on the loans will be deferred for up to two years, with 33 percent payments due in each of the years following that for new loans.
Borrowing limits on secured or unsecured loans start at a minimum of $250,000 up to a maximum of $50 million. The interest rate on the loan is LIBOR plus 3 percent.
Unlike the federal PPP and EIDL Advance emergency loans, MSLP loans must be paid back in full.