The Federal Reserve is giving companies with up to 15,000 employees the green light to tap its emergency Main Street lending program.
The US central bank announced Thursday it is expanding both the scope and eligibility for the program, which has yet to launch.
The changes will allow both larger and smaller companies to tap the lending facility, which is aimed at helping American businesses stay alive during what could be the biggest economic shock in US history.
The moves come after national restaurant chains such as Shake Shack and Ruth’s Chris were slammed for participating in a separate package, the Paycheck Protection Program, which was intended to provide aid to small businesses. Funding ran out before many small businesses could get loans and public companies have since been told to return the loans they received.
The Fed said businesses with up to 15,000 employees or up to $5 billion in annual revenue will now be eligible for the Main Street facility. Previously, the program was limited to companies with up to 10,000 employees and $2.5 billion in revenue.
At the same time, the program will welcome smaller companies. The Fed said the minimum loan size will double to $1 million.
Underscoring the rising risk of widespread bankruptcies, the Fed is adding a third loan option that will cater to companies with “greater leverage.” In this loan category, lenders would be forced to take on additional risk in case the loans go bad.
It’s not clear if US shale oil companies, many of which are teetering near bankruptcy, will be allowed to participate in the Main Street program.
