Small business lending program near launch: Fed
WASHINGTON: The US central bank’s program to help smaller businesses will roll out its first loans in coming days aimed at preserving jobs, Federal Reserve Chair Jerome Powell said Friday. Soon after the COVID19 pandemic hit the world’s largest economy, the Fed unveiled the Main Street Lending Program along with a host of other facilities to help support businesses.
But since early April, the central bank has expanded and modified the terms after receiving thousands of letters from lenders and potential borrowers. The facility aims to help ease financial strains of companies too big for the government’s Paycheck Protection Program, which is targeted at firms with under 500 employers, but not big enough to have ready access to financial markets.
“This was for the companies that are in the middle,” Powell said during an online forum. “It is very challenging because it’s an extraordinarily diverse space, the credit needs of different kinds of companies in different industries are extraordinarily diverse.” But after the modifications, “We’re days away from making our first loans in Main Street,” he said in the event hosted by Princeton University. He said the key aim is to help prevent more Americans from losing their jobs. “Everything we do is focused on creating an environment in which those people will have their best chance to keep their job or get a new job,” Powell said. “That is the point of this exercise.”
Government data on jobless benefits show more than 40 million workers have lost their jobs at least temporarily since mid-March when the lockdowns were imposed to slow the spread of the coronavirus. The unemployment rate spiked to 14.7 percent in April, and is expected to move higher still. The Main Street program offers four-year loans ranging from $500,000 to $200 million or more for the larger firms. – AFP