Does your business need funds at highly beneficial terms? NavFile is conducting research on the Main Street Lending Program that was created by the Federal Reserve System and is being administered by the Federal Reserve Bank of Boston. The Board of Governors of the Federal Reserve System created the lending program in response to the economic effects of the COVID-19 shutdown. As of October 2020, many businesses are having trouble obtaining the loans as only 1% of available funds have been used. NavFile looks to help businesses get loans under the program.
If you want to learn more about the program, read on or reach out to our team here.
Overview of the Program
The Main Street Lending Program is geared toward small and medium-sized businesses and offers very favorable terms that include not having to make principal payments for 2 years and interest payments for 1 year. The loans in the program are made for 5 years and a balloon payment of 70% of the loan is due at the end of the term. Rates for the loan are 3% plus short term LIBOR and is adjustable. All loans in the program are backed 95% by the Federal Reserve, with the remaining balance covered by the lending institution. The lending institutions that can take part in the program are mostly banks and credit unions with operations in the United States.
Eligible borrowers are any U.S. based business that was created before March 13, 2020, and has 15,000 or fewer employees or had revenues that were $5 billion or less. It also seems that a business must be organized as a business entity, which may exclude sole proprietor businesses. There are some other restrictions; however, that is the main requirement to be eligible for a loan.
Above: NavFile Main Street Lending Program banner.
Benefits to Businesses
The immediate benefits of the program to businesses are access to a loan with deferred payments and low interest. NavFile is performing an analysis of the program to identify benefits that are not evident from the posted details.
Access to the Loans
Access to the Main Street Lending Program has been difficult for many businesses. Many banks are not participating in the program. The ones that are, have not been approving a significant amount of loans. As of October 2020, the Federal Reserve reported that approximately $2 billion in loans have been made out of $600 billion in available funds (less than 1% of funds).
To obtain a Main Street Lending Program loan, a business has to contact one of the banks that are participating in the program. The Federal Reserve Bank of Boston has a list on their site. All banks are allowed to use their lending standards to approve loans. The issue that borrowers are facing is that many banks have varying qualification factors. NavFile looks to help businesses get the loans they need from one of the participating banks by understanding which bank would be the best fit for a particular business.
Our research will allow us to know which banks are lending and help you find the right bank to get a loan from.
If you want more information on how we can help you get a Main Street Lending Program loan, please contact us.
More information on the program will be posted on the site when we have further details to share.