The Federal Reserve announced yesterday that it will provide up to $2.3 trillion in loans to businesses, state and city governments — made possible in part by Treasury funds set aside in the government stimulus package. In essence, the Fed is answering the need for liquidity and trying to prevent a liquidity crisis from becoming a solvency crisis. Again funds will be provided through banks for businesses with as many as 10,000 employees but under $2.5 billion in revenue last year. The terms of these loans are not the same as those offered under the Paycheck Protection Program for smaller businesses with under 500 employees, though those businesses aren’t excluded from applying. The program is expected to launch in the coming weeks.
These actions provided by the Federal Reserve will:
- Bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses.
- Ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans through the Main Street Lending Program.
- Increase the flow of credit to households and businesses through capital markets, by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF).
- Help state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities.
For more details on loans and eligibility, visit the Federal Reserve’s PDF that outlines these specifics. You may also contact your bank to see if they are participating, as well as where to find other participating lending institutions.