COVID-19 UPDATES
Main Street Lending Program Lender Portal Now Open
On Monday, the Federal Reserve Bank of Boston announced that the Main Street Lending Program Lender Portal is open. The program is to operate through three facilities: the Main Street New Loan Facility; the Main Street Priority Loan Facility; and the Main Street Expanded Loan Facility.
U.S. Treasury Secretary Steven T. Mnuchin issued a statement indicating: “As announced last week, the portion of the loans retained by the originating bank has been lowered to five percent for all eligible loans submitted to the program, creating additional balance sheet capacity for participating lenders. I encourage all eligible lenders to register in order to provide loans to eligible borrowers as soon as possible.”
For more information, visit www.bostonfed.org/mslp.
Access the Main Street Lending Program Lender Portal
New Applications Being Accepted for COVID-19 EIDL Advance
The U.S. Small Business Administration has announced that new applications are being accepted for the COVID-19 Economic Injury Disaster Loans (EIDL) Advance program. The advance of up to $10,000 is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue. The loan advance will not have to be repaid. SBA resumed processing EIDL applications that were submitted before the portal stopped accepting new applications on April 15 and will be processing those applications on a first-come, first-served basis. On June 15, SBA began accepting new EIDL and EIDL Advance applications from qualified small businesses and U.S. agricultural businesses.
The new eligibility for agricultural businesses is a result of additional funding appropriated by Congress in response to the COVID-19 pandemic. Agricultural businesses include those engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)). SBA is encouraging all eligible agricultural businesses with 500 or fewer employees wishing to apply to begin preparing their business financial information needed for their application.
SBA Revises PPP Application Forms to Reflect Change in Applicant Eligibility
The Small Business Administration late Friday released new borrower and lender guaranty application forms for the Paycheck Protection Program to reflect expanded eligibility for applicants with prior felony convictions.
Previously, businesses were ineligible for PPP loans if at least 20% of their equity was owned by someone who had been convicted of a felony in the past five years. Under the interim final rule, this prohibition window is reduced to one year for businesses whose owners have been convicted of non-financial felonies. The five-year period remains in place for felonies involving fraud, bribery, embezzlement or false statements on applications for loans or federal assistance.
SBA’s revised lender guaranty and borrower application forms reflect the changes in the interim final rule and should be used for new loan applications going forward.
Download the revised borrower application
Download the revised lender guaranty application
Fed: Small Businesses Face Heightened Risk of Failure Due to Pandemic
The coronavirus pandemic poses “acute risks” to the survival of many of the nation’s small businesses, the Federal Reserve said Friday in its semiannual monetary policy report. The Fed warned that depending on the evolution of COVID-19 and the pace of recovery, “some small businesses and highly leveraged firms might have to shut down permanently or declare bankruptcy, which could have longer-lasting repercussions on productive capacity.”
Roughly half of small business entered the pandemic with cash reserves that could sustain their businesses for fewer than 15 days without revenue, the Fed indicated. Since the pandemic began, a majority of small firms have experienced revenue losses, roughly half do not expect to return to their normal level of operations within the next six months and many have seen deep employment declines.
“Taken together, these data suggest a considerable risk of failure for a large number of small businesses,” the report noted. While about three-fourths of the nation’s small businesses have applied for funding through the PPP, the Fed noted that “some industries may face an ongoing need after the program expires.”
The Fed noted that banks were well-capitalized heading into the pandemic and have thus far been able to meet the credit needs of their customers while simultaneously strengthening loan loss reserves. However, the report noted that certain vulnerabilities – “most notably those associated with liquidity and maturity transformation in the nonbank financial sector” – have amplified some of the economic effects of COVID-19.
Powell to Present Semiannual Monetary Policy Report to Congress
Federal Reserve Chairman Jerome Powell will appear before Congress this week to present the agency’s semiannual monetary policy report. Powell is to testify before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. The Financial Services Committee will also hold a Tuesday hearing on fraud and cybercrime during the pandemic.
Senators Join Call for PPP Simplification
Senators called on the Department of the Treasury and the Small Business Administration to make the Paycheck Protection Program loan-forgiveness process less complex. A bipartisan group of 44 senators led by Sen. Mike Rounds (R-S.D.) urged the agencies to cut the loan-forgiveness application to no longer than one page for loans under $250,000.
In a separate letter, all 47 Senate Democrats advocated streamlined forgiveness for smaller loan amounts, a lender safe harbor for these loans, a reporting calculator and other online tools, and a help line for borrowers and lenders. The letter also called for collection of demographic data within any new forgiveness application.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.