Federal Lending Program Begins for
Small and Medium-Sized Businesses The Federal Reserve's
Main Street Lending Program,
which was announced at the
beginning of April, is finally underway. The program encourages banks to lend to
small and medium-sized businesses that have
been hit hard by the COVID-19 pandemic, but only businesses that were
in "sound financial condition"
before the pandemic are eligible. Businesses have to apply
for the loans with their banks,
which have to register as
main street lenders. Five-year loans ranging between $250,000 to $300 million
will be offered with no principal due for two years
and no interest due for one year. Businesses with up to
15,000 employees or up to $5 billion
in annual revenue are eligible. The central bank will purchase 95% of each loan,
assuming the majority of the risk and allowing
banks to make more loans.