Fed’s Main Street program funneled its first loans to casinos, roofers and dentists.


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The Federal Reserve released detailed data on Monday on its first-ever attempt to get loans to midsize businesses, and the figures show that the program is reaching a diverse — if tiny — set of borrowers.

The numbers run through July 31 and account for $92.2 million in loans, which is about half of what the so-called Main Street program has backed so far, based on more recent data cited by a Fed official last week. The program’s 13 loans through July 31 went to a range of companies — including a dentist, a concrete company, a lighting company, a roofing company and a casino.

The smallest loan, for $1.5 million, went to Pablo Alfaro Group, a Florida real estate company. The largest, for $50 million, went to an entity associated with Mount Airy, the Pennsylvania casino.

The Main Street program is a new effort for the Fed, and it has gotten off to a rocky start. First announced in late March as part of the Fed’s broad pandemic response package, the program is meant to funnel loans to midsize businesses, especially those who are too big for government small-business loans but too small to tap stock and bond markets to raise money.

The Fed is protected against losses on the loans by funding from the Treasury Department, money Congress earmarked to support the Fed’s emergency lending push in its coronavirus response legislation.

Lawmakers have questioned why it took so long to get the program running — Main Street did not purchase its first loan until July 15 — and why so little of its $600 billion capacity is being used. One member of the congressional commission that is overseeing the program called it a “failure” at a hearing last week.

But the president of the Federal Reserve Bank of Boston, Eric Rosengren, said at the oversight hearing that he expects program activity to pick up with time.

Commercial banks originate the midsize business loans, and the Fed buys 95 percent of them. According to the data released Monday, the majority of the loans through July 31 were made through the City National Bank of Florida.

Mr. Rosengren, whose central bank branch runs the effort, said last week that more than $600 million in loans were in some stage of approval. He also indicated that Main Street could be used more often if virus conditions worsen in the fall, causing a tightening of private credit.

The Fed’s disclosures also showed that it had purchased about $12 billion in already-issued corporate bonds and corporate bond exchange-traded funds through July 29, part of another first-time program that it unveiled earlier to keep the market for big-company debt functioning.

The Fed has been shifting away from exchange-traded fund purchases and toward individual bond buying, guided by a broad market index of its own design.


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