The Federal Reserve on Thursday announced a new $600 billion lending program for midsize businesses in an effort to help thousands of additional firms pummeled by the coronavirus pandemic.
The central bank also unveiled several other new and expanded credit initiatives to aid households, companies and municipalities.
Under the Main Street Lending Program, the Fed said it will offer loans to companies with up to 10,000 workers and as less than $2 million in revenue. The loans will defer both principal and interest payments for the year. Banks will be able to take out new loans or increase the size of existing ones, and must retain a 5% share, selling the remainder to the Fed.
“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Federal Reserve Board Chair Jerome H. Powell. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
Companies that take advantage of the program “must commit to make reasonable efforts to maintain payroll and retain workers,” the Fed said.
The program has been eagerly awaited because the Fed’s existing initiatives have focused on the stimulus package’s Payment Protection Plan, which provides forgivable loans to cover payroll and other operating expenses to businesses with fewer than 500 workers, as well as bailouts for large corporations such as airlines.
The Main Street Lending facility is aimed at helping thousands of additional midsize businesses.
The Fed also said Thursday it will:
► Set up a new $500 billion lending program for state and local governments.
►Provide additional funding for the PPP program for the small businesses
► Expand a program that supports student, auto and credit card loans to include commercial real estate loans.
This story will be updated.