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Fed Expands Scope, Eligibility For Main Street Lending Program

Courtesy of ZeroHedge View original post here.

As Jerome Powell previewed during yesterday's FOMC zoom-conference, in which he said that the Fed was set to expand the scope of its rescue operations, at 10am on Thursday the Fed did not disappoint, and announced that it is expanding the scope and eligibility for the Main Street Lending Program which was developed "as part of its broad effort to support the economy" and "to help credit flow to small and medium-sized businesses that were in sound financial condition before the pandemic."

Specifically, the central bank said businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, compared to the initial program terms which were for companies with up to 10,000 employees and $2.5 billion in revenue, doubling the revenue limit from previous guidelines and raising the employee limit by 5,000.

The maximum loan size would be limited to 4x adjusted 2019 EBITDA while the minimum loan size was lowered to $500,000 from $1 million, and a third loan option for leveraged companies was added. Under the new loan option, lenders would retain a 15% share on loans that when added to existing debt do not exceed 6x EBITDA. This compares to the existing loan options where lenders retain a 5% share on loans, but have different features.

Under all of the loan options, lenders will be able to apply their industry-specific expertise and underwriting standards to best measure a borrower's income.

In total, three loan options—termed new, priority, and expanded—will be available for businesses. The chart below summarizes the different loan options.

The unspoken message here is that with every passing day, the Fed is expanding its various bailout programs suggesting that demand for Fed backstops is far greater than expected, which then also means that the economic damage is is much bigger than the Fed anticipated just weeks ago.


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  1. What a joke. They are in the process of monetizing the entire economy. We are doomed.