Boston Business Journal: The Federal Reserve has expanded its $600 billion Main Street Lending Program to serve much smaller businesses.
The program — first announced as part of the Fed’s larger $2.3 trillion package of loan and bond initiatives — now has lower loan limits, with a minimum size of $250,000. That’s down from a $500,000 limit announced in May, also lowered at that time. The loan terms have also been lengthened from four years to five years, according to an announcement Monday by the Federal Reserve.
Other changes to the Main Street Lending Program include:
- The maximum loan sizes have now been upped from $25 million to $35 million for new loans and up to $50 million for priority loans, which had also been capped at $25 million.
- Banks now only have to hold 5% of priority loans, down from 15% before. New loans remain unchanged at 5%.
- Principal payments on new loans will now be deferred for two years, up from one year, with 33% payments due in each of the years following that for new loans. Priority loans will see a 15% repayment in the first year and then 70% repayment in years two, three and four.