Fed moves to provide $2.3T in loans
The Federal Reserve Thursday announced additional efforts to support the economy amid the coronavirus pandemic, including providing up to $2.3 trillion in loans to households and businesses of all sizes. The Fed has taken several steps to address economic concerns and has committed to using the full range of its authorities.
Of note, the Fed created the Main Street Lending Program, which will offer 4-year loans to companies with up to 10,000 workers or revenues less than $2.5 billion. Businesses that receive loans through the Small Business Administration's paycheck protection program can also apply for Main Street loans.
Eligible lenders under the Main Street Lending Program are U.S. insured depository institutions, bank holding companies, and savings and loan holding companies. The program is funded with $600 billion, with the Treasury Department providing $75 billion from funds allocated by the CARES Act, and is scheduled to run through Sept. 30, 2020.
The Fed will purchase 95 percent participations in the loans while lender retains 5 percent. Other terms of the Main Street loans include:
- principal amortization and interest deferred for one year;
- an adjustable rate of the Secured Overnight Financing Rate (SOFR) + 250-400 basis points;
- minimum loan size of $1 million;
- maximum loan size is lesser of:
- $25 million; or
- an amount that, when added to existing committed but undrawn bank debt, does not exceed four times the eligible borrower's 2019 earnings before interest, taxes, depreciation, and amortization;
- prepay permitted without penalty;
- borrower pays lender a fee of 100 basis points while the Fed pays 25 basis points per year; and
- lender must attest that funds will not be used to pay down existing lines with the lender from the business.
There is also a separate facility, the Main Street Expanded Loan Facility, which allows mid-sized firms that have existing lines with a lender to scale up the existing loan, rather than take out a new loan with a potentially different lender. The terms under the expanded facility are slightly different.
In addition to the Main Street Lending Program, the Fed also announced efforts to:
- bolster the paycheck protection program by creating the Paycheck Protection Program Liquidity Facility that will extend credit to eligible financial institutions that originate these loans, taking the loans as collateral at face value;
- increase the flow of credit to households and businesses through capital markets by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities, as well as the Term Asset-Backed Securities Loan Facility, which combined will now support up to $850 billion in credit backed by $85 billion in credit protection provided by the Treasury; and
- help state and local governments manage cash flow stresses caused by the coronavirus by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities, with the Treasury providing $35 billion of credit protection to the Fed for the facility.
NAFCU will continue to analyze how Fed actions will impact credit unions and the economy. The association's coronavirus economic brief is available here.
Add to Calendar 2021-07-13 14:00:00 2021-07-13 14:00:00 Fair Lending - What Your Board Needs to Know The new administration has made it crystal clear that fair lending compliance is at the top of its financial services agenda, and non-compliance is not an option. It’s time to dust off that fair lending program and make sure your preventive and detective controls are fully functioning as designed. This webinar will help you understand what is going on in fair lending compliance at credit unions, so that you can make sure your board is up to speed on key regulatory risks and paying attention to key fair lending risk indicators. Topics include, fair lending risk management, understanding fair lending risk in underwriting and pricing, and key considerations when reporting fair lending findings. Key Takeaways Identify and analyze potential fair lending risks in a practical manner. Understand recent fair lending enforcement case studies. Craft a strong message to the board on managing fair lending risk. Purchase Now$295 Members | $395 Nonmembers (Additional $50 for CD) One registration gives your entire credit union access to the on-demand recording until July 13, 2022.Already registered? Go to the Online Training Center to view live. Who Should Attend? Chief Executive Officers NAFCU Certified Compliance Officers (NCCOs) NAFCU Certified Risk Managers (NCRMs) Risk titles Compliance titles Legal staff Education Credits NCRMs will receive 1.0 CEUs for participating in this webinar. NCCOs will receive 1.0 CEUs for participating in this webinar. CPA credit information is below; recommended 1.0 CPE credits. CPA Certification Credit Information Reviewer: Josie Collins, Associate Director of Education, NAFCU Learning Objectives: Identify and analyze potential fair lending risks in a practical manner. Understand recent fair lending enforcement case studies. Craft a strong message to the board on managing fair lending risk. Program Level: Basic Prerequisites Needed: None Advance Preparation Needed: None Delivery Method: Group Internet-Based Recommended CPE Credits: 1.0 credits Recommended Field of Study: Regulatory Ethics – Technical National Association of Federal Credit Unions (NAFCU) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. Learn more. About Our Webinars Our webinars are streamed live from NAFCU headquarters near Washington, D.C. Your audio/video feed of the presenters includes presentation slides and downloadable handouts. You can easily submit your questions to the presenters at any time during the live broadcast, with no dialing over the phone! The audio and video stream directly through your computer. Web NAFCU firstname.lastname@example.org America/New_York public
Credits: NCCO, NCRM, CPE
Get daily updates.
Subscribe to NAFCU today.