$2.3 Trillion Stimulus
Fed Issues $2.3 Trillion Stimulus; More SBA Loans May Be on the Way
The Federal Reserve announced on Thursday that it will invest up to $2.3 trillion more to propel the economy through the COVID-19 outbreak. The extra funding includes more money—up to $600 billion—for loans to aid small and mid-sized businesses.
The Fed also announced a facility to purchase forgivable loans issued to small or mid-sized businesses under the Paycheck Protection Program. The program is aimed at small businesses that have been affected by the COVID-19 outbreak.
Several lenders reportedly had stopped approving loans under the previous $349 billion effort after reaching internal caps, American Banker reports. Several banks said Thursday that the Fed’s facility will allow them to accept more applications.
“This opens up more liquidity for us to process more loans,” Todd Nagel, CEO of IncredibleBank in Wausau, Wis., told American Banker. Nagel says his firm has more than 1,000 applications waiting to go through.
The Fed also announced it would open a “Main Street Lending Facility” to provide four-year loans to struggling businesses with up to 10,000 employees or less than $2.5 billion in annual revenue that had been on previously solid ground prior to the outbreak.
Also on Thursday, the Fed announced additional funding toward the purchases of some types of high-yield bonds, collateralized loan obligations, and commercial mortgage-backed securities.
“We will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery,” Jerome Powell, chair of the Federal Reserve, said in a speech Thursday announcing the latest measures. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”