The Federal Reserve unveiled plans to provide up to $2.3 trillion in loans to support households and local governments, as the U.S. economy continues to work through the disruptions from the novel coronavirus. The central bank also released more details on its anticipated Main Street Lending Program, which it says will support up to $600 billion in loans tied to small- and mid-sized businesses.
Similar to previously announced liquidity facilities, the Fed and the U.S. Treasury will set up a “special purpose vehicle” to purchase securities and assets, with credit protection and equity supported by the $454 billion in money appropriated in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The Main Street Lending Program was announced by the Fed on March 23 but the central bank now says it will be able to scale up $75 billion in support from the Treasury into $600 billion in 4-year loans to companies hiring up to 10,000 workers or with revenues of less than $2.5 billion.
The loans, to be disbursed through eligible banks, would allow for interest deferred payments for a year and would be at least $1 million in size. Under the program, banks will retain a 5% share of the loan and sell the remaining 95% to a facility to be set up by the Fed.
The Fed and the Treasury say the program is still being finalized and will solicit feedback from the public through April 16.
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