Federal Reserve Takes Action to Provide up to $2.3 Trillion in Loans

In the latest sign of relief for businesses impacted by the coronavirus crisis, the Federal Reserve announced actions to provide up to $2.3 trillion in loans to support the U.S. economy. These actions follow the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which allocated more than $450 billion to the Federal Reserve to provide liquidity to eligible businesses, states or municipalities in the face of the COVID-19 pandemic.

On April 9, 2020, the Federal Reserve released details of the new programs and expanded facilities intended to address these needs.

“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Federal Reserve Board Chair Jerome H. Powell. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”

The Federal Reserve actions include:

• Extending liquidity to financial institutions participating in the Small Business Administration’s Paycheck Protection Program (PPP) by establishing the Paycheck Protection Program Liquidity Facility to bolster the loan program
• Purchasing up to $600 billion in loans through the Main Street Lending Program to help credit flow to small and mid-sized businesses that were in good financial standing before the crisis
• Expanding the size and scope of the Primary Market and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF) to increase the flow of credit to households and businesses through capital markets
• Establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities to assist state and local governments with managing cash flow stresses related to the coronavirus pandemic

For more details on these actions and programs, visit https://www.federalreserve.gov/covid-19.htm.

Contact me or another Kaufman Rossin professional for assistance with navigating and maximizing available relief programs for your business.