The Federal Reserve says that its Main Street Lending Program designed to help small and medium-sized companies get through the pandemic has managed to make just eight loans in its first month of operations.
In its first report on the program, the Fed said Thursday it had provided $76.9 million in loans since it started operations July 6. That’s just a sliver of the up to $600 billion the Fed has said it will provide to cash-strapped companies through the program.
The largest loan, for $50 million, went to a Mount Pocono, Pennsylvania, casino operator. That was followed by $12.3 million to a dental practice in Madison, Wisconsin.
The Fed has had trouble from the beginning getting the Main Street program up and running. Critics contend the central bank has made conditions for getting support so stringent that many companies have decided it is not worth the effort.
Under the Fed’s program, the money it is providing can either be new lending or increases to existing loans. The Treasury Department has allocated $75 billion to offset any losses. Banks make the actual loans but the Fed will buy 95% of the loan to minimize the risks to banks.
The Main Street program requires borrowers to make “commercially reasonable” efforts to keep all of their workers. But it doesn’t require that any laid-off workers be rehired. By contrast, the very popular Paycheck Protection Program requires that at least 60% of the money be spent keeping workers on the payroll. If that requirement is met, the government will forgive the loans.
Under the Main Street program, the Fed can purchase 95% of a loan from banks if the loans go to businesses with fewer than 15,000 employees or that have less than $5 billion in annual revenue. The loans can range from $250,000 to $300 million.
The first data released Thursday showed that other companies receiving money included a Fort Lauderdale, Florida, roofing company and a Pompano Beach, Florida, concrete services company.
The release of the data came in advance of a hearing Friday by a congressional oversight panel where Eric Rosengren, president of the Federal Reserve Bank of Boston, will testify about the program. The Boston Fed is overseeing the program’s operation.