Federal Reserve Announces New “Main Street Lending Program” and Additional $2.3 Trillion in Loans to Support the Economy

by Nick Giacoumakis and Brian Pirri | Apr 9, 2020

This morning, the Federal Reserve (Fed) announced new initiatives to provide up to $2.3 trillion in loans to support the economy, offering assistance to households and employers of all sizes across the economy. This is the latest move from the federal government to provide relief and stability during this period of constrained economic activity amid the COVID-19 pandemic.

One of the most significant initiatives from today’s announcement is the launch of the Main Street Lending Program to help ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans. The Department of the Treasury, using funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will provide $75 billion in equity to the facility.

Additional actions the Fed is taking to support employers of all sizes and communities across the country include:

  • Bolstering the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses. The PPP provides loans to small businesses so that they can keep their workers on the payroll. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value.
  • Increasing the flow of credit to households and businesses through capital markets, by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF). These three programs will now support up to $850 billion in credit backed by $85 billion in credit protection provided by the Treasury; and
  • Helping state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities. The Treasury will provide $35 billion of credit protection to the Federal Reserve for the Municipal Liquidity Facility using funds appropriated by the CARES Act.

More information on the relief efforts can be viewed in the Fed’s press release.

We are working hard to keep you informed of the government resources available to you during this difficult time. If you are interested in learning more about the new programs and growing resources available to you, please reach out to our team. We will be happy to work with you on finding the right opportunities that will help you overcome any financial strain caused by the current environment. Be well and stay safe!