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COVID Response: The Main Street Lending Program

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Abstract

The Main Street Lending Program was created to support credit to small and medium-sized businesses and nonprofit organizations that were harmed by the pandemic, particularly those that were unsupported by other pandemic-response programs. It was the most direct involvement in the business loan market by the Federal Reserve since the 1930s and 1940s. Main Street operated by buying 95 percent participations in standardized loans from lenders (mostly banks) and sharing the credit risk with them. It would end up supporting loans to more than 2,400 borrowers and co-borrowers across the United States, with an average loan size of $9.5 million and total volume of $17.5 billion. This article describes the facility's goals, its design, the challenges and constraints that shaped its reach, and the characteristics of its borrowers and lenders. We conclude with some lessons learned for future policymakers and facility designers.

Suggested Citation

  • David M. Arseneau & José Fillat & Molly Mahar & Donald P. Morgan & Skander J. Van den Heuvel, 2021. "COVID Response: The Main Street Lending Program," Staff Reports 984, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:93081
    Note: This paper was prepared for an upcoming issue of the Economic Policy Review and a related New York Fed conference, “Implications of Federal Reserve Actions in Response to the COVID-19 Pandemic.”
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    1. Minoiu, Camelia & Zarutskie, Rebecca & Zlate, Andrei, 2026. "Motivating banks to lend? Credit spillover effects of the Main Street Lending Program," Journal of Monetary Economics, Elsevier, vol. 158(C).

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    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G2 - Financial Economics - - Financial Institutions and Services

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