(Bloomberg) — The Federal Reserve reduced the minimum loan amount in its Main Street Lending Program to $100,000 from $250,000, potentially opening the little-used emergency facilities to more U.S. businesses.
The Fed, which first announced the program in March, will also allow borrowers that have taken out as much as $2 million in Paycheck Protection Program loans to exclude that debt from calculations of their eligibility to apply for a Main Street program loan, it said in a statement Friday. All five members of the Board of Governors voted to approve these changes.
Lawmakers, business owners and industry groups have for months called for changes such as reducing the minimum loan size as the coronavirus pandemic continues to dampen U.S. economic activity. The Fed said it has bought almost 400 Main Street loans, or $3.7 billion, which represents just 0.6% of the potential $600 billion it could lend under the program.
The Fed adjusted some of Main Street’s fees to encourage the provision of smaller loans. Other program provisions, including banks’ retention of 5% of each loan that they sell to the Fed, remain unchanged.
The Main Street program, which has been changed several times and was only fully operational in July, is set to expire on Dec. 31. It’s backed by $75 billion of taxpayer money authorized by Congress in the CARES Act.
The Fed’s announcement comes at the end of a tumultuous week in markets and the global economy as virus cases surge in parts of the U.S. and Europe, darkening the outlook for the pace of the recovery. Congress and the White House have been unable to pass further stimulus measures ahead of next week’s U.S. presidential election, leaving businesses and unemployed Americans without added support as the country battles another wave of infections.
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