WORLD US Fed expands scope of business lending program amid pandemic

WORLD

US Fed expands scope of business lending program amid pandemic

Xinhua

15:18, May 01, 2020

20.jpgA woman wearing a mask walks across a street in Washington D.C., the United States on April 30, 2020. The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic. (Photo: Xinhua)

WASHINGTON, April 30 (Xinhua) -- The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic.

Businesses with up to 15,000 employees or up to 5 billion dollars in annual revenue are now eligible, up from previous limits of 10,000 employees and 2.5 billion dollars in revenue, the Fed said in a statement, adding the minimum loan size will also decline to 500,000 dollars from 1 million dollars.

A start date for the program will be announced soon. The availability of additional credit is intended to help companies that were in sound financial condition prior to the onset of the COVID-19 pandemic maintain their operations and payroll until conditions normalize, according to the central bank.

Robert Perli, a former Fed staffer and now head of global policy research at Cornerstone Macro, said Thursday on Twitter that the main obstacle for the program remains the risk sharing for banks.

"Banks will have to retain a 15% share of loans to higher-leveraged companies. I think banks will be cautious in deciding who to lend under those parameters," he said.

The move came after the Fed on Wednesday warned that the COVID-19 pandemic poses "considerable risks" to the U.S. economy over the medium term while keeping its benchmark interest rate unchanged at the record-low level of near zero.

"The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," the Fed said Wednesday in a statement after concluding a two-day policy meeting.

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The White House is seen in a rainy day in Washington D.C., the United States on April 30, 2020. The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic. (Photo: Xinhua)

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A man wearing a mask walks on the side walk near the White House in Washington D.C., the United States on April 30, 2020. The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic. (Photo: Xinhua)

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The Washington Monument and the Reflecting Pool are seen in a rainy day in Washington D.C., the United States on April 30, 2020. The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic. (Photo: Xinhua)

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A person walks towards the U.S. Capital building in Washington D.C., the United States on April 30, 2020. The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic. (Photo: Xinhua)

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A man wearing a mask walks on the side walk near the White House in Washington D.C., the United States on April 30, 2020. The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic. (Photo: Xinhua)

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A man walks dogs at the Lincoln Memorial in Washington D.C., the United States on April 30, 2020. The U.S. Federal Reserve on Thursday announced that it is expanding the scope and eligibility for its 600-billion-dollar Main Street Lending Program designed to help small and medium-sized businesses hit by the COVID-19 pandemic. (Photo: Xinhua)

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