It looks like more money, up to $2.3 trillion, will be available in the form of loans to help households, employers and state and local governments during the coronavirus pandemic.
“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 on April 9, 2020. “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.”
One of the biggest components of the expansion, the “Main Street” lending program, intends to make $600 billion available to small and mid-sized businesses that make a reasonable effort to keep their employees paid during this time. It will finance 4-year loans, with principal and interest payments deferred for the first year, to businesses with up to 10,000 employees and less than $2.5 billion in revenue. The central bank will purchase up to $600 billion in loans through this program with a $75 billion infusion from the Treasury. Businesses that have taken advantage of the PPP can also receive Main Street loans.
This is, at least in part, in response to the Labor Department’s announcement that 6.6 million people filed for unemployment last week, making it nearly 17 million who have filed claims in the last three weeks.
Another $500 billion is set aside to help two different groups: struggling state and local governments through the purchase of municipal bonds and large corporations by expanding the existing Term Asset-Backed Securities Lending Facility.
Finally, while not part of this specific program, the Fed announced this week that it will extend term financing to banks making loans as part of the PPP. Nearly a week after rollout to businesses, and one day away from its extension to the self-employed, the program has had less than stellar reviews, so hopefully this will help make it easier for more businesses to get these loans to keep their businesses afloat.
We are trying our best to keep up with all the news so we can update you as it changes. If you have any questions at all about your specific situation and how to best support your business, don’t hesitate to reach out. And stay safe and healthy!