As described in our previous advisory, on April 9, 2020 the Federal Reserve announced it was exercising its emergency lending authority to create a Main Street Lending Program (Main Street Program) to provide up to $600 billion in liquidity to lenders that make direct loans to main street businesses.

On April 29, Federal Reserve Board Chair Jerome Powell announced that a second round of term sheets for the Main Street Program would be released soon and that this program would become operational shortly thereafter. These new term sheets follow the Federal Reserve's reported receipt of more than 2,200 comment letters and its active discussions with various stakeholders, including investment and retail banks, with a goal of maximizing the efficacy of the Main Street Program for eligible businesses of differing sizes and capital needs.

We will provide an analysis of the new term sheets once released. Powell also reiterated the Federal Reserve’s commitment to utilizing its full range of tools to support the U.S. economy, noting that preserving the flow of credit is essential. Powell also remarked that these tools are being “forcefully, proactively and aggressively” deployed but remain subject to legal limits. In particular, Powell cautioned that the Federal Reserve’s lending authority does not allow it to make grants but only loans to solvent businesses with an expectation of being repaid.

Separately, on April 23 the Federal Reserve announced that it would be making publicly available certain information regarding its emergency lending programs, which will include the Main Street Program. Specifically, names and details of participants in such programs, as well as amounts borrowed and interest rate charged, will be reported by the Federal Reserve. Potential borrowers may want to keep this in mind when analyzing their options for seeking capital.