FED – FED updates frequently asked questions to clarify the Board & Department of Treasury’s expectations regarding lender underwriting for the Main Street Lending Program

The FED on Friday updated its frequently asked questions (FAQs) to clarify the Board & Department of Treasury’s expectations regarding lender underwriting for the Main Street Lending Program. The revised FAQs emphasize that lender underwriting should look back to the borrower’s pre-pandemic condition & forward to their post-pandemic prospects. The FAQs also clarify supervisory expectations for lenders originating Main Street loans.

The program supports lending to small & medium-sized for-profit businesses & nonprofit organizations that were in sound financial condition before the COVID-19 pandemic but lack access to credit on reasonable terms. The program offers several five-year loan options, with deferred principal & interest payments for qualified businesses & nonprofits to allow borrower’s time to recover from the pandemic

The revised FAQs were developed with the Federal Deposit Insurance Corporation & the Office of the Comptroller of the Currency.

Also, the Federal Reserve Bank of Boston anticipates that the Main Street program will begin accepting loans made to multiple co-borrowers when that functionality is deployed next week. In anticipation of that added functionality, the Main Street FAQs updated today also include details regarding co-borrower loans.

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