The Federal Reserve is poised to launch its Main Street Lending Program to support small and medium-sized businesses. But many feel the program is too little, too late.

The Fed indicated on April 9 it would provide $75 billion in equity to the program from the $454 billion it received in the CARES Act, estimating that would generate up to $600 billion in loans. 

Key elements of Main Street Program include:

• Available to entities that have fewer than 15,000 employees or under $5 billion in annual revenue
• Loan size between $500,000 and $200 million
• Loan terms of four years with principal and interest payments deferred for the first year, but loans are non-forgivable (unlike PPP’s)
• Adjustable interest rate of LIBOR plus 300 basis points.

Both Republicans and Democrats have criticized the Fed for its delay and for tough terms many struggling companies will have difficulty accessing, raising concerns about the program’s efficacy.

Once the program launches, the Fed will closely monitor its impact and can adjust it to boost economic performance. Roughly $259 billion of the Fed’s $454 billion from the CARES Act has not been allocated by the Fed to a specific program.

This “monetary reserve,” which can support over $2 trillion in loan activity, coupled with a reopening economy (May unemployment dropped from 14.7% to 13.3%) are why many Republicans have decided to wait and see about more relief legislation and coalesced— at least, for now— around a figure of $1 trillion.