(Reuters) - The Boston Federal Reserve released fresh guidance on Wednesday about how it plans to wind down the Main Street lending program, which is set to expire at year end after Treasury Secretary Steven Mnuchin asked the Fed to return unused funds.
The Boston Fed said https://www.bostonfed.org/supervision-and-regulation/supervision/special-facilities/main-street-lending-program.aspx lenders must register by Dec. 4 and that eligible loans should be submitted to the Main Street portal by Dec. 14. The Main Street facility will stop issuing commitment letters for the program by Dec. 23.
The Main Street lending program, which supported small and medium-sized businesses struggling because of the pandemic, received a tepid response when it launched over the summer. Some lenders said the terms were unappealing compared to loans they could offer on their own, and many potential borrowers struggled to meet the stringent requirements.
Now the program is set to end after Dec. 31, along with other emergency lending programs established by the Fed during the pandemic to backstop the corporate bond market and state and local governments.
Of the suite of emergency lending facilities set up by the Fed to support the economy during the pandemic, the Main Street program was among the most complex. Policymakers struggled to design a system tailored to businesses that were too large to participate in the Paycheck Protection Program created by the CARES Act, but too small to benefit from the Fed support offered to corporate bond markets.
The Fed revised the program several times to make it available to a larger pool of borrowers by opening it to nonprofit organizations and reducing the minimum loan amount to $100,000. The Main Street lending facilities had $5.4 billion in loans as of Nov. 18, a sliver of the $600 billion available.