On September 23, 2020, Chuck Morton was quoted in Inc. on changes to the Federal Reserve’s Main Street Lending Program (MSLP). Formally announced on April 9 and enacted on June 15, the MSLP was expected to support up to $600 billion in low-interest loans aimed at companies with as much as $5 billion in annual revenue or fewer than 15,000 employees.
According to the article, 248 loans worth about $2.4 billion have either been booked or are in the pipeline to date, only 0.4 percent of the expected outlay. The program has been widely criticized as having such onerous terms that borrowers and lenders don’t want to take part, and business owners believe a series of modest program adjustments announced on September 18, mostly pertaining to dividend payments and other administrative issues, will do little to stem the damage.
Morton suggests reserving judgment on the program. "I'm guardedly optimistic that there will be more [changes] to come. I do think there could be some other things that could be done to make it more borrower friendly," he says, citing MSLP's well-known restrictions on borrowers. Among others, there are limitations on executive compensation and a requirement that companies make "reasonable efforts" to retain their employees during the loan term, which may make the financing option less palatable for some businesses.
"I was pretty pessimistic about the program from the beginning, and some of the restrictions on the borrowers make it unattractive as a loan of first resort," says Morton, but he notes that as economic conditions worsen, which is a real possibility in the absence of additional stimulus, the program could become more popular. "As things get more sober, [the MSLP] may emerge as a more attractive alternative."
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