The economic recovery that was beginning to gather momentum in May and June, now appears to be receding.
In the last quarter, the economy contracted 9.5 percent compared with the prior year quarter–an annual rate of 32.9 percent–breaking a record, although falling in line with gloomy estimates. Weekly jobless claims also rose 1.43 million as the pandemic continues to hobble economic growth.
The Federal Reserve continues to use all the tools at its disposal to help. At a news conference yesterday, Fed Chairman Jerome H. Powell announced that the central bank would extend through December 31 its crisis-era lending facilities, including the Main Street Lending Program, a low-interest loan offering aimed at companies with up to $5 billion in annual revenue or fewer than 15,000 employees. The program was scheduled to expire on September 30.
“Recent labor market indicators point to a slowing in job growth, particularly among smaller businesses,” Powell said, in understated Fedspeak. He added that the Fed intends to maintain facilities like the Main Street Lending Program “until we’re very confident that the turmoil from the pandemic and the economic fallout are behind us.”
So for those who are interested in possibly tapping into the Main Street Lending Program, you have a bit more time. Here are the key aspects of the Fed loan scheme.
In recent weeks, reports have suggested that the program may be unpopular among small to midsize businesses and that interest even among banks has been tepid. But as Congress continues to debate a Phase 4 bill, with businesses hanging in the balance, the Main Street Lending Program may get renewed interest, says Robert Litan, an economist and nonresident senior fellow at the Brookings Institution, a nonpartisan think tank in Washington. “It’ll be the only game in town if Congress doesn’t do something for small business.”
The Main Street Lending Program was announced on March 23 and a working proposal was unveiled on April 9. The program is funded with $75 billion in aid from the Coronavirus Aid, Relief, and Economic Security (Cares) Act.