Among the many economic hardships created in 2020 by the COVID-19 pandemic, small and medium-size businesses continue to face the contraction of the availability of credit. In response, and as part of its efforts to help stabilize the U.S. economy, the Federal Reserve previously announced specific actions it would take to provide up to $2.3 trillion in loans for businesses.
One such action was the establishment of the Main Street Business Lending Program (â€œMain Streetâ€) for qualified businesses. The program aims to increase the flow of credit to small and medium-size businesses that had good financial standing pre-COVID-19, and that have subsequently suffered a covered loss. For businesses that qualify, Main Street previously offered three facilities, all of which are authorized by the Federal Reserve Board and maintain similar features, namely maturity, interest rate, deferral of payment of principal and interest for two years, and the ability to prepay without penalty.
In July 2020, Main Street was expanded to include nonprofits. Additionally, while tribal businesses were previously deemed eligible for the program, certain restrictions prevented tribal governments from receiving dividends. Under the recently announced rule expansions, the Federal Reserve is granting a waiver from the dividend restriction for tribal businesses.
Navigate the Main Street Lending Program with REDW
In order to make loans more accessible by expanding eligibility, the Federal Reserve continues to update Main Street term sheets. For assistance in understanding the latest updates in the Main Street Lending Program, including terms, eligibility, certifications and covenants, and in preparing to apply, please contact REDW Principal Michael Jacobson, CPA, MBA.
REDW is committed to keeping you informed at all times, but especially during a crisis of the magnitude of the COVID-19 pandemic.Â Stay connected with us onÂ LinkedInÂ andÂ @REDWLLC. Or check out some of our other updates on our COVID-19 Resource Hub.