More than three months ago, the U.S. Department from the Treasury and the Federal Reserve gave hope to small- to medium-sized businesses (SMBs) using the announcement from the Main Street Lending Program.
The joint $600 billion initiative would provide loans to companies with 15,000 employees or fewer or had revenues of $5 billion or less last year. Loans issued under the program might have a five-year maturity, with deferral of principal payments for two many deferral of interest payments for one year.
But the launch from the program was delayed over disagreements between the Fed and also the Treasury, The Wall Street Journal (WSJ) reported.
While the Fed favored easy terms that would increase the risk of the government losing money, the Treasury preferred a more conservative approach and capped the losses at $75 billion, sources told WSJ.
As due to the inability to reach an accord, not a single loan continues to be issued by Wednesday (July 8), and sources told the paper the Fed has stated weeks happen to be wasted as businesses continue to suffer.
\”Would this program be precisely the way I'd have designed it, or exactly the way another person would have designed it? No, but we all need to work together, and we been employed by together quite effectively,\” Boston Fed President Eric Rosengren told WSJ.
\”Anytime you have a negotiation, you will find likely to be compromises that are made,\” he added. \”I expect that we'll keep having to make compromises.\”
Treasury Secretary Steven Mnuchin, Fed Chair Jerome Powell, and their top lieutenants still work out the facts. Mnuchin told WSJ the discussions are part professional process and didn't reflect disagreements.
The Main Street program is built to serve companies that couldn't satisfy the 500 or fewer employees dependence on the forgivable loan program from the Small Business Administration's Paycheck Protection Program (PPP).
Last month, the Treasury agreed to extend the word of Main Street loans to five years from four and delay principal payments for two years, instead of one.
Last week, the Treasury reported PPP continues to have nearly $132 billion waiting to become borrowed. Of this number, a lot more than $30 billion in approved PPP loans have been returned or canceled by businesses.
Also last week, Mnuchin said bipartisan work is underway on the potential PPP extension.
The secretary said he's had very productive conversations with U.S. Senator Marco Rubio of Florida plus they plan to talk with U.S. Senator Ben Cardin of Maryland.
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