Retailers are welcoming the Federal Reserve’s decision to expand the scope of its coronavirus relief program.
In a statement, the National Retail Federation commended the central bank, which announced yesterday that it would allow larger mid-sized businesses impacted by the COVID-19 pandemic to participate in its $600 billion Main Street Lending Program.
Three weeks ago, the Fed unveiled an array of initiatives aimed at boosting small and mid-sized firms with up to 10,000 employees and revenues of less than $2.5 billion, initially funding up to $600 billion in loans. Shortly after, the NRF penned a letter to Fed chairman Jerome Powell and Treasury Secretary Steven Mnuchin, urging them to remove such limitations and “exercise discretion to make these programs more widely available.”
Now, companies with up to 15,000 employees and revenues of less than $5 billion will be able to take advantage of the offering. Eligible firms will receive loans from banks under a four-year term at below-market rates, with amounts ranging from $500,000 to $200 million.
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The central bank has yet to determine a start date for the program, which was designed to help businesses that were unable to qualify for the Small Business Administration Paycheck Protection Program or the Economic Injury Disaster Loan program. (However, companies that have received PPP loans are still eligible for the Main Street program.)
“Expanding eligibility for this program will provide much-needed support for some of America’s most recognizable brands and their workers, who have been severely impacted by the pandemic,” said NRF president and CEO Matthew Shay. “[The Fed’s program will] ensure that companies in the middle can access valuable economic support critical to preserving their ability to reopen quickly once the crisis has passed.”
Last week, congressional leaders passed a $484 billion measure to expand funding for small businesses after the SBA’s PPP funds had been used up. According to the NRF, nearly 200,000 small retailers had taken part in the PPP, receiving an average loan of $155,000 each for a total of $29 billion.
In late March, President Donald Trump signed the $2 trillion emergency relief CARES Act intended to aid businesses, individuals and state governments while the pandemic rages on. The deal includes $250 billion in checks to individuals and families, $250 billion in jobless insurance benefits, $350 billion in small business loans and $500 billion in loans for distressed companies.