Detail

Fed Announces Limited Adjustments to Main Street Lending Program Terms

  • November 6, 2020

The Federal Reserve in Washington, DC

The Federal Reserve on Oct. 30 announced limited adjustments to the terms of its Main Street Lending Program (MSLP) facility in an attempt to support small and medium-sized businesses affected by the COVID-19 outbreak. (Fed news release

  • The MSLP has the capacity to issue up to $600 billion in loans, yet has only completed approximately 400 loans totaling $3.7 billion. (Washington Post, Oct, 30) 

  • With congressional negotiations over a pandemic relief package at an impasse, The Fed reduced the minimum loan size for three Main Street facilities from $250,000 to $100,000 and reduced fees to lenders who facilitate the loans. (Wall Street Journal and Roundtable Weekly, Oct. 30)

  • The Fed also issued a set of frequently asked questions to clarify that Paycheck Protection Program loans of up to $2 million may be excluded when determining the maximum MSLP loan size. (MSLP FAQs, Oct. 30)

  • Real Estate Roundtable and President Jeffrey DeBoer yesterday commented to CoStar, “The Main Street Lending Program won’t be energized by modest revisions. Banks need greater incentives to focus on the program, the borrower eligibility rules must be rethought, and the loan underwriting rules should better reflect the needs of troubled businesses. Without far deeper reforms to the program, its full potential assistance will continue to be untapped,” DeBoer stated. (CoStar, Nov. 5, “Modest Changes May Not Be Enough to Make Relief Effective, Head of Real Estate Industry Group Says”)

  • DeBoer testified about the MSLP on Sept. 9 before the Senate Banking, Housing and Urban Affairs Committee on how to improve access to Federal Reserve credit facilities for businesses such as manufacturing, retail, restaurants, real estate owners, and other asset-based borrowers. (Roundtable Weekly, Sept. 11)

  • DeBoer told the Committee, “The recommendations that I have made on the Main Street Lending Program … really require no additional funds from the federal government. They are administrative. They could be done tomorrow by the Treasury and the Fed if they wanted to.” (Roundtable Oral Comments and written statement / video of DeBoer's Testimony and Q&A with Senators)

  • Fed Chairman Jay Powell testified before Congress on Sept. 23 that the central bank has “done basically all of the things that we can think of.” Powell added, “There is nothing major that we see now that would be consistent with opening it (MSLP) up further.” (American Banker, Sept. 23)

  • Last month, The Fed released its Summary of Commentary on Current Economic Conditions, showing that “commercial real estate conditions continued to deteriorate in many Districts.” (The Fed’s Beige Book, Oct. 22)

  • The Fed lending programs backed by pandemic relief legislation are set to expire at the end of December.  Fed Chairman Powell and Treasury Secretary Steven Mnuchin must decide which programs to extend into 2021. (New York Times, Nov. 5) 

The Roundtable continues to urge regulators and lawmakers to develop specific MSLP changes to bolster small business tenants and other industries struggling with the pandemic’s ongoing economic impact. 

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