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The Main Street Lending Program: Who Borrowed and How Have They Benefited?

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  • J. Christina Wang

Abstract

The Main Street Lending Program (MSLP) was established by the Federal Reserve to supply credit to small and, especially, midsize businesses so they could weather COVID-19–induced disruptions. This study uses Dun & Bradstreet (D&B) data on the financial condition and overall viability of firms to examine the characteristics of MSLP borrowers and their performance after receiving a loan relative to the performance of their peers. Estimates show that, even when differences in firms' industries and geographic regions are taken into account, a firm was more likely to borrow from the MSLP if it was larger, more active, had a good but not excellent risk score, was hit harder by the pandemic, had received a Paycheck Protection Program (PPP) loan early but was located in a county with a longer delay in PPP lending, operated in a nonessential industry, or was located in a county with fewer community banks. A nontrivial fraction of MSLP borrowers also received second-draw PPP loans in 2021, indicating that they were, in fact, in need of funding. Receiving an MSLP loan improved firms' financial condition progressively and significantly on average, even though it did not lead to significant increases in employment over the year following loan receipt.

Suggested Citation

  • J. Christina Wang, 2022. "The Main Street Lending Program: Who Borrowed and How Have They Benefited?," Working Papers 22-24, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:95346
    DOI: 10.29412/res.wp.2022.24
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    More about this item

    Keywords

    COVID-19; Main Street Lending Program; SMEs; credit frictions;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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