As small and midsize businesses in the United States struggle to survive the new COVID-19 economic reality, politicians continue to debate when and how they will provide a new round of aid to the lifeblood of the American economy. And while the Paycheck Protection Program is the most well-known and widely used program of the initial round of assistance, at least one critical program has been widely underutilized to date: the Main Street Lending Program.
The MSLP is one of the key economic programs created by Congress as part of the CARES Act. Similar to the PPP, the MSLP is intended to utilize the existing banking system to deliver aid to struggling businesses. Under the program, financial institutions can extend term loans to eligible borrowers and then sell 95% of such loans to the Federal Reserve. Financial institutions are expected to underwrite, service and retain 5% of such loans.
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