The Federal Reserve is once again expanding one of its new lending programs designed to blunt the economic impact of the COVID-19 pandemic.
Just days after it announced the expansion of its municipal liquidity facility (MLF) to include more cities and counties, it announced the expansion of its Main Street Lending Program focused on providing financial support for small and medium-size businesses.
The expansion means the program, which has yet to launch, can serve a wider variety of businesses, both bigger and smaller than originally proposed, as well as businesses with more leverage.
Businesses with a maximum 15,000 employees and $5 billion in revenue will now qualify for the program, up from 10,000 employees and $2.5 billion in revenue initially announced.
Minimum loan sizes, however, will be $500,000, down from the original $1 million, and a third option for loans will be available for borrowers with more leverage.
Under the new option, companies can borrow up to $25 million if their total debt doesn’t exceed six times their income after adjustments for interest payments, taxes, depreciation and other items so long as their lender retains a 15% share of the loan.
The original plan restricted borrowers to a maximum $25 million if their debt didn’t top four times EBITDA and it required lenders to retain just 5% of the loan.