Matt Valeo called 10 banks this week, because he wanted to apply for a Main Street loan for his small tech company. Eight banks said they had never heard of the Main Street Lending Program. Two smaller banks said they knew about the program but did not plan to participate. Valeo’s experience illustrates some of the concerns about the novel $600 billion loan program the Federal Reserve launched on Monday to help small and midsize firms, the Washington Post reported. The much-delayed program appears to be off to a tepid start, with lingering questions over whether there will be enough banks participating to make the loans. The Fed’s Main Street Lending Program is supposed to provide low-cost loans to firms with fewer than 15,000 workers, but it has taken the Fed nearly three months to launch it and many have criticized it for being too little, too late. Both the Paycheck Protection Program and Main Street Lending program are multibillion-dollar lending programs aimed at helping smaller and midsize companies, but Main Street is a loan that can be used for any expense. PPP is a grant that doesn’t need to be repaid, as long as most of the money goes toward paying employee salaries. The Fed runs the Main Street program, while the Small Business Administration handles PPP. The programs play critical roles in the government’s vast effort to keep companies afloat and persuade them to retain or even hire back workers amid the worst recession since the Great Depression, which has sidelined at least 20 million workers. PPP had a chaotic launch April 3 as banks struggled to get it running and handle the deluge of customers seeking funds, but it ultimately handed out $500 billion. The Fed’s Main Street program has only just begun. To get a Main Street loan, businesses have to apply through a bank, which can then sell 95 percent of the loan to the Fed, transferring most of the risk to the central bank. The Fed first announced its intent to create the program on March 23. Since this is the first time the Fed has done anything like this, current and former central bank officials say it took time to get the details right. On Monday, the Fed announced that banks could start registering to participate in the program. On Tuesday, Fed Chair Jerome H. Powell told a Senate panel there was “substantial interest” from banks in taking part in Main Street loans. But the banking community is less enthusiastic. “We have limited interest from community banks nationwide,” said Paul Merski, executive vice president for the Independent Community Bankers of America. “It’s a very challenging and complex program.”
