The Federal Reserve eased lending conditions of its Main Street Lending Program this week, cutting the minimum loan value to $250,000 and extending the repayment window to five years from four. The central bank said the move came after potential lenders and borrowers expressed concern that the previous minimum loan amount of $500,000 was too large to help many businesses affected by the pandemic.
Registration for the program should begin “soon,” according to Federal Reserve Chair Jerome Powell.
“Supporting small and mid-sized businesses so they are ready to reopen and rehire workers will help foster a broad-based economic recovery,” Powell said in a statement. In a further move, the Fed said it will purchase 95% of all loans under the program, rather than covering a range between 85% and 95%.
In other Fed-related news, the Federal Reserve Board and Federal Open Market Committee signaled Wednesday that it is “committed to using its full range of tools to support the U.S. economy” in its recovery from the coronavirus pandemic.
The FOMC’s projections show a median unemployment rate of 9.3% in 2020, falling to 6.5% in 2021 and 5.5% in 2022. The agency also projected that the U.S. economy will shrink by a median of 6.5% of gross domestic product in 2020, recovering to a growth rate of 5% by 2021 and 3.5% by 2022.
Officials also said they see the federal funds rate remaining near zero until at least 2022.
