Federal Reserve Loan Program for Mid-Sized Businesses


the Paycheque Protection Program Loans aim to help the country’s smallest businesses weather the pandemic. This week, the Federal Reserve will launch another large business lending program called the Main Street Lending Program.

When looking at the details of the program, Karen Petrou, Managing Partner at Federal Financial Analytics, said the name might be a bit misleading.

“This is only the ‘Main Street’ program if the main street in your city looks a lot like Park Avenue,” she said.

Companies with up to 15,000 employees may apply. The loan amount ranges from $ 500,000 to $ 25 million. Petrou said it wasn’t a lot for a company like General Motors, but it was for small businesses.

“Small grocery stores, cafes, restaurants, hairdressers, auto repair shops – many of them never see half a million dollars in annual income, let alone pay off such a large loan,” said Petrou.

The program is more likely to appeal to specialty manufacturers, such as software companies and other midsize businesses, according to Matt Hetrick, who heads accounting firm Harmony Group.

He said that for some of these companies borrowing money might make sense in the long run.

“What’s the cost of losing all that talent or shutting down this business versus the cost of borrowing money to get through a period of expected loss? Hetrick said.

Small businesses may not be able to apply for these loans, but they will benefit, said Jeremy Swan of accounting and consulting firm CohnReznick.

“Let’s just say you’re a small local grocery store. Who are your suppliers? Typically, these will be medium and larger companies, ”Swan said.

The Fed charges more interest than the PPP program, and these loans cannot be canceled. Companies will have to repay them in four years.

Nathan Rogge, president and CEO of the Bank of Southern California, said it was not enough time for many of his clients.

“These are customers who are clearly under duress. They don’t know where things are going, ”Rogge said. “When you give them a loan with such a short amortization, it’s really hard to get comfortable with it. “

Congress has allocated nearly $ 700 billion to the paycheck protection program, but Fed Chairman Jerome Powell said there will basically be no limit to this one. The Treasury and Federal Reserve can simply make more funds available.

Since the money won’t run out, Rogge said many companies are waiting.

“Businesses and banks are in the position of ‘let’s wait and see exactly how this works. I just don’t feel that urgency to have an app the day it opens, ”Rogge said.

In the meantime, it helps clients apply for other federal and state loan programs with longer repayment windows.

Why are consumer prices increasing?

Some shoppers may have noticed that their grocery bills are higher lately. Energy prices and used cars and trucks are also on the rise. Jayson Lusk, head of the agricultural economics department at Purdue University, said several factors had pushed up food prices, including China which recently bought more American products, more drivers and challenges related to food production. pandemic in supply chains and the workforce. In addition, wages are on the rise, even though productivity increased faster as labor compensation for decades. “I expect inflation to probably continue for at least the next six semesters,” Lusk said.

Learn more about inflation here.

What do the CDC’s most recent mask guidelines mean for stores and their workers?

By now you’ve heard the news on these tips: People with vaccines no longer need to wear a face mask indoors in most settings. Yet local governments and businesses are allowed to demand them. The mask warrants were tricky, even dangerous, so that public enterprises can navigate. Retail workers across the country have been harassed and physically assaulted while applying the mask mandates. “The updated guidelines created an impossible situation for retailers, ”said Lisa LaBruno, senior executive vice president of retail operations and innovation with the Retail Industry Leaders Association. “There is now an ambiguity in expectations, both from members of the retail team and from customers. “

Why do you have to be unemployed for more than six months before you are classified as “long-term unemployed”?

After all, people are starting to feel the stress and financial difficulties of long-term unemployment before reaching the 27 week mark. According to the latest data from the Bureau of Labor Statistics, 4.2 million Americans are long term unemployed. Patrick Carey, deputy commissioner at the Bureau of Employment and Unemployment in the Statistics Bureau, has an explanation. “The break of 27 weeks or more fits well with the maximum length of time many states offer regular UI benefits,” Carey said.


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