Federal Reserve Lowers Main Street Lending Program Loan Amounts

The Federal Reserve has lowered its Main Street Lending Program minimum loan amounts to $100,000. In addition, the Federal Reserve has introduced a new fee schedule for loans that are less than $250,000. The move allows banks to charge a 2 percent origination fee to borrowers while also eliminating the 1 percent transaction fee that lenders have to pay to the Federal Reserve for loans $250,000 or greater. Also, the servicing fee has been increased for loans $250,000 or greater to 0.50 percent. Loans less than $250,000 will have a servicing fee, payable to the lender, or 0.25 percent.

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The change in the looks to be designed to allow banks to reach more borrowers and allow them to make money on the loans. For Loans under $250,000, banks do not have to pay the Federal Reserve a transaction fee and can charge a higher origination fee to the borrower. The Federal Reserve is also increasing the servicing fee for loans over $250,000, which will also provide banks with more compensation.

If you need help with obtaining a Main Street Lending Program loan, please feel free to contact us. Also, check out our page about the program and the research that we are performing.

Source: Federal Reserve Press Release 10/30/20