FEDERAL RESERVE BOARD’S PANDEMIC RELIEF EFFORTS

On April 9, 2020 Treasury Secretary Mnuchin approved the establishment of a Main Street Business Lending Program and a Municipal Liquidity Facility to support the flow of credit to American workers, businesses, States, counties, and cities impacted by the Coronavirus pandemic.

Main Street Business Lending Program

Small and medium-sized businesses, through no fault of their own, have faced severe financial strain from widespread closures and liquidity pressures in the financial system. Using funds appropriated under the CARES Act, Treasury will make a $75 billion equity investment in a special purpose vehicle established to implement the Main Street Business Lending Program. This investment will enable up to $600 billion in new financing for the 40,000 medium-sized businesses that employ 35 million Americans, with up to 10,000 employees or $2.5 billion in 2019 annual revenues.

Municipal Liquidity Facility

Treasury will also make a $35 billion equity investment in the Municipal Liquidity Facility (MLF), which will provide up to $500 billion in direct financing to states, counties, and cities to help ensure they have the funds necessary to provide essential services to citizens and respond to the Coronavirus pandemic.

The MLF will provide funds to help offset the delay in state and local tax receipts caused by the deferral of the tax filing deadline, and to help offset any short term losses in tax revenues resulting from reduced business and consumer activity due to the Coronavirus pandemic.

States, counties, and cities will be able to sell new municipal notes directly to the MLF to obtain the funds they need quickly and efficiently.

Paycheck Protection Program Liquidity Facility

Treasury also authorized the establishment of a new facility to bolster the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value.

 

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