RESEARCH TRIANGLE PARK – The Main Street Program from the Federal Reserve may now be a more attractive opportunity for smaller business, such as startups and emerging entrepreneurial companies, as an alternative to the Paycheck Protection Program being offered by the U.S. Small Business Administration.

The fed has made several revisions in the Main Street offering, including a smaller minimum amount, a larger max loan limit, extending terms of repayment, and principal repayment to now begin after two years.

The fed also said it plans to open up lender registration for the program soon.

Some $75 billion is available.

“Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery,” Federal Reserve Chair Jerome Powell said in a statement. “I am confident the changes we are making will improve the ability of the Main Street Lending Program to support employment during this difficult period.”

Small and medium-sized businesses are a vital part of the economy and employ tens of millions of people, and, because their needs vary widely, the Board has extensively sought feedback and revised the Main Street program accordingly.

Changes include:

  • Lowering the minimum loan size for certain loans to $250,000 from $500,000
  • Increasing the maximum loan size for all facilities
  • Increasing the term of each loan option to five years, from four years
  • Extending the repayment period for all loans by delaying principal payments for two years, rather than one
  • Raising the Reserve Bank’s participation to 95% for all loans

The accompanying chart breaks down more details:

Federal Reserve chart

“Once they have successfully registered for the program, lenders are encouraged to begin making Main Street loans immediately,” the fed added.

Main Street’s offerings also are expanding soon to include nonprofit organizations, the fed noted.

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