Days from launch, Fed officials eye 'Main Street' program expansion

FILE PHOTO: Federal Reserve Chair Jerome Powell testifies during a House Financial Services Committee hearing on "Monetary Policy and the State of the Economy" in Washington, U.S. July 10, 2019. REUTERS/Erin Scott/File Photo

(Reuters) - Federal Reserve Chair Jerome Powell on Friday said central bank officials are open to expanding the Main Street Lending Program, which is days away from issuing its first loans, to businesses that may not currently qualify but need assistance to avoid shedding workers.

Fed staffers also reminded businesses interested in applying for the upcoming Main Street lending facility that they can seek financing even if they have already received some other types of loan assistance.

The Main Street Lending Program is targeting medium-sized and small-sized businesses facing financial strain because of the coronavirus pandemic. The program is open to businesses with 15,000 or fewer employees and with revenue of $5 billion or less, but Powell said the Fed could adjust those parameters.

“I can imagine us expanding on either end too,” Powell said during an interview webcast on Friday. “We are looking back at companies that were in good, solid financial shape before the pandemic, we’re trying to find those companies and we’re trying to create credit products that work for them.”

Businesses that received economic injury disaster loans or loans from the Paycheck Protection Program, which offers forgivable loans to companies with fewer than 500 employees, can still apply for loans in the Main Street program, Fed staffers explained in a webinar for borrowers interested in the Main Street program.

However, borrowers cannot participate in the Main Street facility if they are taking part in the Fed’s primary market corporate credit facility, which will purchase corporate debt from eligible issuers.

The Main Street program is currently not open to nonprofit organizations, but Fed staffers said they are working with the Treasury Department to evaluate the “feasibility” of adjusting the program criteria to include the group.

The Fed has not disclosed a specific launch date for the program.

Reporting by Jonnelle Marte; Editing by Cynthia Osterman