The Main Street Lending Program's rollout is moving along, albeit at a slower pace than I had initially hoped. Over the weekend, the Wall Street Journal reported that the delay of the initial rollout was caused by tension between the different agendas of The Federal Reserve and Treasury Department. Now that the program has launched, each participating bank has to sort out its policies and procedures for the program.
The good news is that some banks are further along than others, and have already issued term sheets for Main Street loans. And there are plenty of other banks who are getting their acts together and will soon be ready to launch their programs.
Some inside baseball might be helpful, to help borrowers understand some of what it takes for a bank to roll out a new loan program.
- Each bank needs to make its credit policy to decide how they will underwrite new loans and on what basis.
- Banks have their risk departments that evaluate each new program.
- While the information on the Main Street Lending program is far more thorough than was available at the PPP rollout, there are still open questions coming from borrowers that banks want clarity on.
- There is an additional complexity to these loans in that the participating bank will sell 95% of the loan to the Federal Reserve. Each bank needs to understand precisely how this process will work and how the loan will move forward.
- Banks need to prepare all of their legal documentation to support the new loans.
- Finally, Banks need to train their teams on all of their policies and procedures.
The good news is that Banks are moving along with this work, and I am confident that the Main Street Lending Program will land up helping many business owners. For those interested, I will be conducting an Aminar about the program at noon EST today,