Section 4003(c)(3)(D)(ii) of the Act provides that the Board of Governors of the Federal Reserve System (the Federal Reserve) may establish a main street lending program in order to support lending to small and mid-sized businesses by eligible lenders (the Main Street Lending Program), which must remain consistent with the requirements of section 13(3) of the Federal Reserve Act, using such funds as appropriated by section 4027 of the Act.
On April 9, 2020, the Federal Reserve released additional guidance on the Main Street Lending Program. The Secretary provided that under a Main Street New Loan Facility (the MSNLF) and a Main Street Expanded Loan Facility (the MSELF), a federal reserve bank will lend to a single common special purpose vehicle (SPV) on a recourse basis. Such SPV will then use these funds to (i) purchase 95 percent participations in Eligible Loans (as defined below) from U.S. insured depository institutions, U.S. bank holding companies, and U.S. savings and loan holding companies (Eligible Lenders) under the MSNLF; and (ii) purchase 95 percent participations in the updated tranche of Eligible Loans from Eligible Lenders. In each case, the Eligible Lenders will be required to retain 5 percent of each Eligible Loan under the MSNLF, and each upsized tranche of each Eligible Loan under the MSELF, respectively. The Secretary will make an initial $75 billion combined contribution in connection with the MSNLF and the MSELF, with up to $600 billion expected to be made available to the programs collectively.