The Main Street Business Lending Program, a Municipal Liquidity Facility establishment, and expansion of other existing programs under the CARES Act were approved today by the U.S. Treasury Secretary Steven T. Mnuchin pursuant to the Federal Reserve Act on Thursday, April 9, 2020. Secretary Mnuchin also announced the establishment of the Primary and Secondary Market Corporate Credit Facilities, which will be used to purchase eligible corporate debt.
In addition, the Term Asset-Backed Securities Loan Facility (TALF) was established to help Americans meet individual and business credit needs, by facilitating the issuance of asset-backed securities. TALF will also include “highly-rated newly issued collaterized loan obligations and legacy commercial mortgage-backed securities as collateral.”
According to a U.S. Department of the Treasury press release, these programs will support the flow of credit to American workers, businesses, States, counties and cities impacted by the coronavirus pandemic.
It is no secret small and medium-sized businesses are facing “severe financial strain from widespread closures and liquidity pressures in the financial system,” the release states.
The Treasury is making a $75 billion equity investment under the CARES Act in a special purpose vehicle established to mobilize the Main Street Business Lending Program. Ultimately, the Treasury expects that this will enable up to $600 billion in new financing for businesses with up to 10,000 employees or $2.5 billion in 2019 annual revenues.
The expanded lending programs announced today are intended to be paired with other relief programs already established under the CARES Act, such as the Paycheck Protection Program, Employee Retention Credits, and Economic Impact Payments.
The Treasury also announced they’ll make a $35 billion equity investment in the Municipal Liquidity Facility, which is expected to provide up to $500 billion in direct financing to states, counties, and cities. The funds are intended to provide essential services and help states and local municipalities respond to the coronavirus pandemic.
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